Justice Dept. Sues to Stop AT&T/Time Warner Merger

The Justice Department is suing AT&T to stop its $85 billion purchase of Time Warner, setting the stage for an epic legal battle with the telecom giant, the AP reports. The government claims that consumer cable bills will rise if the merger goes through, saying the deal would "substantially lessen competition, resulting in higher prices and less innovation for millions of Americans." AT&T would be able charge rival distributors such as cable companies "hundreds of millions of dollars more per year" for Time Warner's networks, the Department of Justice charged in a press release. The government also said the combined company would use its power to slow the TV industry's shift to new ways of watching video online. Web TV services are cheaper than traditional cable.

The government's objections to the deal have surprised many on Wall Street. AT&T and Time Warner are not direct competitors; "vertical" mergers between such companies have typically had an easier time winning government approval than mergers of rivals. One potential complication in the government's case may be the role of the president and influence he may have exerted on the antitrust process. As a candidate, Donald Trump vowed to block the deal because it concentrated too much "power in the hands of too few." As president, Trump has often blasted CNN for its coverage of him and his administration, disparaging it as "fake news." The White House and the Justice Department have both said that the president did not tell the antitrust chief, Makan Delrahim, what to do.

(More Time Warner stories.)