Department Of Justice To Sue To Block AT&T, Time Warner Merger
ARI SHAPIRO, HOST:
The Department of Justice announced this afternoon that it will sue to block AT&T's purchase of Time Warner. This was slated to be a massive merger, a deal worth $85 billion. And now, as the case heads to court, this could set up one of the largest antitrust showdowns in many years. NPR's Alina Selyukh is here to walk us through this. Hi, Alina.
ALINA SELYUKH, BYLINE: Hello.
SHAPIRO: Give us the background on this merger.
SELYUKH: So it was supposed to be a massive shake-up. As you were pointing out, AT&T already owns satellite TV provider DirecTV. Time Warner is a huge media company. It has channels like HBO, TNT, TBS, of course CNN. And the merger of the two has been pending for about a year. All it needed was the Justice Department approval. And today the DOJ basically said no go. They do not want the merger to go through. And to stop it, they are taking the companies to court.
And the crux of their case against the merger is essentially that combined together, AT&T and Time Warner would control so much of both what people watch and how they watch it, that they could raise prices for both consumers and their competitors. To give you an example of that latter one, if I'm a startup streaming company and I want to get a show from TBS, AT&T theoretically could charge me more.
SHAPIRO: How unusual is it for the Justice Department to go to court to block a merger like this one?
SELYUKH: So what is unusual is that this merger is what's called a vertical merger. These two companies do not directly compete, which is the case that they've been making. In the past, these kinds of deals go through. AT&T's general counsel has called this decision to sue a radical and inexplicable departure from decades of antitrust precedent.
It also throws off this ideological argument about antitrust reviews that conservative administrations tend to be more lenient on consolidation. Well, in this case, the Trump administration is essentially siding with some consumer groups and liberal senators who have fought against this merger.
SHAPIRO: Does the Justice Department's objection necessarily mean that the merger is dead, or could it still go through?
SELYUKH: No. So what it means is that the fate of the merger now rests with a judge at district court in the District of Columbia. Theoretically, AT&T could also agree to make some concessions, to sell maybe CNN or Turner Broadcasting or DirecTV to appease the government. To be clear, AT&T has said that they have no such intention. And it is unusual for these cases to actually go to trial. Companies usually settle.
SHAPIRO: You mentioned that AT&T could sell off a property, such as CNN.
SHAPIRO: There have been reports that the Justice Department was pushing AT&T to do that. And we know that President Trump is a big critic of CNN. He often calls it fake news. Is there any evidence that the president's view on this is influencing the antitrust review?
SELYUKH: And the DOJ basically says, bring it on; we're ready - and so does AT&T.
SHAPIRO: NPR's Alina Selyukh, thanks a lot.
SELYUKH: Thank you. Transcript provided by NPR, Copyright NPR.