Justice Dept. sues to stop AT&T’s $85B Time Warner deal

(AP) — 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.

It could also create a new headache for President Donald Trump, whose public statements have raised suspicions that he might have interfered with the department’s decision, potentially undermining its legal case. DOJ’s antitrust chief, Makan Delrahim, has said the president did not tell him what to do. White House spokeswoman Sarah Huckabee Sanders said Monday she wasn’t aware of any specific action related to the case taken by the White House.

In a press release, Delrahim said that a combined AT&T-Time Warner would “greatly harm American consumers” by hiking television bills and hampering innovation, particularly in online television service. The DOJ said AT&T would be able to charge rival distributors such as cable companies “hundreds of millions of dollars more per year” for Time Warner’s programming — payments that would ultimately get passed down to consumers through their cable bills.

In an emailed statement Monday, AT&T general counsel David McAtee said the lawsuit is a “radical and inexplicable departure from decades of antitrust precedent” and that the company is confident that it will prevail in court.

AT&T runs the country’s second largest wireless network and is the biggest provider of traditional satellite and cable TV services. Time Warner owns HBO, CNN, TBS and other networks, as well as the Warner Bros. movie studio.

The government’s objections to the deal surprised many on Wall Street. AT&T and Time Warner are not direct competitors, and “vertical” mergers between such companies have typically had an easier time winning government approval than deals that combine two rivals.

The last time the U.S. government won a court victory in a vertical merger antitrust case was in 1972, when the Supreme Court said Ford’s takeover of a spark-plug business violated antitrust law.

Many had expected government approval of the deal because Obama-era antitrust officials approved a similar deal — Comcast’s purchase of NBCUniversal — in 2011, after imposing restrictions on Comcast’s behavior that were meant to protect consumers.

As a candidate, however, Trump vowed to block the pending AT&T-Time Warner deal because it would concentrate 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 and its reporters as “fake news.”