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November 21, 2017

DOJ Suing to Stop Time Warner, Citing Lack of Pay-TV Competition

IPI expert referenced: Tom Giovanetti | In The News | Media Hit
  Communications Daily

DOJ is suing to stop AT&T's takeover of Time Warner. There had been speculation about such litigation in recent days. Justice didn't comment, though in the evening, it released a statement saying it had sued along with the court complaint.

"AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video distribution models that provide greater choice for consumers," said the complaint. "American consumers have few options for traditional subscription television. ... For traditional video distributors, this lack of competition means huge profit margins. Indeed, AT&T/DirecTV describes the traditional pay-TV model as a 'cash cow' and 'the golden goose.'"

AT&T General Counsel David McAtee in a statement said such litigation would be "a radical and inexplicable departure" from antitrust precedent since vertical mergers routinely get approved "because they benefit consumers without removing any competitor from the market." The company said it's "confident" a U.S. District Court will reject such a suit and allow the deal.

Already, parties were reacting for and against the reported coming court challenge to the takeover.

Consumers Union in a statement said DOJ "is making the right decision" because New AT&T's reach into both telco and media would give it "unprecedented opportunities" to favor TW content in ways that drive up consumer costs and stifle competition. It said that in past deals, behavioral conditions haven't been effective in protecting competition. Americans for Limited Government said it backed such a suit, pointing to media consolidation issues.

The Institute for Policy Innovation in a statement said the transaction "had been considered non-controversial by antitrust observers of all political persuasions." It said opponents of the deal likely don't have a markets or competitive basis and opposition instead is based on President Donald Trump's antipathy for CNN, with Justice "using the heavy hand of government to persecute those it doesn't like." If that's what's driving DOJ, it said, that would be "an ominous turn in the Trump administration."


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