The Feds Just Sued to Block the AT&T–Time Warner Merger
A massive media consolidation deal that would probably have sailed through under Barack Obama just ran into a roadblock. Is it because Trump hates CNN?
Photo by KENA BETANCUR/AFP/Getty Images
Months of hype and speculation got a little more concrete on Monday when the US Justice Department sued telecom giant AT&T to block its $85.4 billion play for cable powerhouse Time Warner, as the New York Times reports.
Populist Democrats have been talking the anti-monopoly talk, but on paper at least, this kind of mega-consolidation seemed like a sure bet to sail through. After all, Comcast bought NBCUniversal under the Obama administration even as concerns were raised about too much media power falling in too few hands. The same alarm bells are ringing far and wide over a company (Time Warner) that produces massively popular content like Game of Thrones living under the same roof as a major cell service provider. Even so, Republicans—a business-friendly party if ever there were one—dominate all three branches of government.
The only problem: Donald Trump is not your typical Republican.
“AT&T is buying Time Warner, and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few," the then candidate inveighed on the campaign trail in Pennsylvania during a furious final push for the presidency last October. Indeed, Makan Delrahim, the head of the Department of Justice's antitrust division who said the merger seemed like no big deal last year, is now leading the charge to prevent it.
“This merger would greatly harm American consumers,” Delrahim said in a statement Monday. “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”
While buzz is rampant that this is about Trump getting revenge on CNN (owned by Time Warner) for covering his administration critically both before and since his stunning election win, there are decidedly less petty reasons to be opposed to this merger. As occasional VICE contributor and Open Markets Institute fellow Matt Stoller wrote for the Washington Post earlier this month:
The business model of a combined AT&T Time Warner is rife with conflicts of interest. AT&T’s direct control over essential news and entertainment would give that corporation a permanent pricing advantage over rival cable networks. Similarly, AT&T would have a natural interest in favoring its own channels on its cable, satellite, and mobile video distribution networks, over other networks.
It's too soon to know how much—if any—influence the White House had on this ostensibly apolitical Justice Department decision. We may find out soon, as AT&T has vowed to fight for its new toy.
“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” the corporation's general counsel, David McAtee, said in a statement. “We are confident that the court will reject the government’s claims and permit this merger under longstanding legal precedent.”
Follow Matt Taylor on Twitter.