DOJ May Stop AT&T Acquisition of Time Warner

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Summary: The Department of Justice is deciding whether an antitrust lawsuit should be filed to stop the AT&T’s acquisition of Time Warner.

AT&T’s acquisition of Time Warner may be hitting a road block. The Department of Justice apparently has been considering filing an antitrust lawsuit against AT&T so the $85 billion acquisition can be blocked. The report by The Wall Street Journal caused Time Warner’s shares to drop 4.1 percent. AT&T’s shares dropped 1.2 percent.

  

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The newspaper reported that the antitrust division of the DOJ is preparing for litigation in case they decide to file the lawsuit. AT&T representatives have been meeting with DOJ officials over the past few weeks, trying to find possible terms that would allow the acquisition to receive government’s approval. The Journal source claims there two sides are not close to an agreement but the DOJ has not made a final decision about pursuing a lawsuit.

AT&T said, “When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios. For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won’t comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception.”

A vertical merger is when a company from one industry buys a company in a similar industry. A horizontal merger is when two companies in the same industry become one. Obviously, the Department of Justice is more hesitant about horizontal mergers because it clearly affects competition. Regulators have approved anticompetitive deals when the companies agree to certain conditions.

The agreement for AT&T to buy Time Warner for $85 billion was reached last October. They were hoping to close the deal by September. This deal could be the biggest corporate acquisition of the year. One provision that they may be required to follow, and one that smaller companies have been pushing for, is to keep Time Warner’s content readily available to other TV providers.

The DOJ is talking with both the companies and outside parties to gain a better understanding of how the deal will affect competition. The Trump administration’s top antitrust official, Makan Delrahim, is still learning about his position so it may still be several weeks for a decision is made. For the most part, Delrahim is opposed to the government using too much intrusive regulatory measures. In a speech at New York University, he said, “Antitrust employs law enforcement principles to maximize economic liberty subject to minimal government imposition.”

Should the companies merge, it would have a drastic effect on the entire entertainment setting. Time Warner is the owner of several top franchises like HBO, TBS, TNT, Warner Bros. and more. Adding Time Warner to AT&T’s brand could make the delivery of their library of content to smartphones, computers and TVs even easier. AT&T bought DirecTV in 2015 and has since been actively bundling the satellite video product with their wireless services.

Do you think the AT&T and Timer Warner deal should be allowed? Share your thoughts with us in the comments below.

To learn more about recent mergers, read these articles:

• Rutgers University Moves Forward with Merger
• AT&T, Time Warner Plan $85 Billion Merger
• Federal Trade Commission Blocks Staples, Office Depot Merger

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