A U.S. Department of Justice lawsuit has at least temporarily slowed the proposed merger of gargantuan AT&T with uber-powerful Time Warner. Before this suit, AT&T had stated in regulatory filings that it expected to finalize its acquisition of Time Warner by year-end 2017.
The Justice Department’s complaint alleges that the combined company could damage “consumers by substantially lessening competition among traditional video distributors and slowing emerging online competition.” The acquisition of Time Warner would “give AT&T the power to make its video distributor rivals less competitive by raising their costs, resulting in even higher monthly bills for American families.”
Further, according to Justice, “the merger…would enable the merged firm to hinder the growth of online distribution that it views as a threat to the traditional pay TV model.” AT&T, of course, has long offered pay TV through its U-Verse service, and has more recently acquired satellite based DirecTV, giving it a huge presence in that segment.
The Justice Department admits that its concerns mostly involve possible future events. A spokesman pointed out that, “The issue isn’t so much that these two compete right now,” but rather the “potential actions they could take.”
AT&T spokesmen agree in their counter arguments, i.e., that the two companies don’t compete directly with each other, and further claim in its defense that the government hasn’t challenged similar types of mergers in decades.
We’re not sure which side will ultimately prevail, but if the court rules in AT&T’’s favor and dismisses the suit, the Republican FCC will very likely approve the merger.
On a separate note, Happy Thanksgiving, Everyone!