The U.S. Government's Problem With AT&T-Time Warner's Tie-Up

Why the DOJ Has a Daunting Battle Ahead in the AT&T Case

The U.S. Justice Department laid out its case against AT&T Inc.’s acquisition of Time Warner Inc. in a scant 23-page complaint in which it seeks a judge’s order blocking the deal. The government argues as follows:

  • AT&T knows that those who control distribution of popular programming can use it as a weapon to hinder competition.
  • The combination of AT&T and Time Warner would give the new company greater clout in demanding competitors pay more for its programming. That will slow development of new ways to distribute content.
  • American families will end up with higher bills as AT&T-Time Warner gain power to raise rates, and force their competitors to do the same by making them pay more for Time Warner’s content.
  • Competitors who refuse to pay more for content will face a backlash from customers who demand access to Time Warner programming that includes the Turner TV networks, HBO and CNN. Those customers might then have an incentive to subscribe directly to AT&T’s DirecTV services.
  • AT&T-Time Warner would also have control of live sports programming including the NCAA basketball championship tournament, Major League Baseball games and championship golf, the telecast rights to some of which are locked up for years.
  • In sum, the combined company’s greater power along with fewer options for its competitors violates federal antitrust laws.

The case is U.S. v. AT&T Inc., 17-cv-2511, U.S. District Court, District of Columbia (Washington).

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