The $108 billion merger “would substantially lessen competition” and result in “higher prices for consumers and less innovation for millions of Americans,” a Justice Department official said today in announcing the lawsuit.
For weeks, the Justice Department and AT&T have been trying to hammer out a deal that would allay government concerns and allow the purchase to move forward, but those efforts have apparently failed.
“We gave a very good faith effort to try to resolve the harm that the government was able to find,” the Justice Department official said about negotiations with Time Warner, which already owns DirecTV.
“The combination of AT&T [and] DirectTV’s vast distribution infrastructure, and Time Warner’s extremely popular television programming would be one of the largest mergers in American history,” the official added.
That “combined power” would let AT&T “use its control over Time Warner’s popular and valuable networks to hinder its rivals, by forcing them to pay hundreds of millions of dollars more per year for the right to distribute those networks,” the official said.
The Justice Department official also warned that such a merger could allow AT&T to slow down advances in technology that would cut costs for consumers.
In statements to the Justice Department, AT&T said specifically that distributors who control popular programming “have the incentive and ability to use that control as a weapon to hinder competition,” the official quoted AT&T as saying verbatim.
Without “an adequate remedy that would fully prevent the harms, the “only appropriate action” was to seek an injunction from a federal judge in hopes of blocking the merger, according to the official. The lawsuit was filed in U.S. District Court in Washington, D.C.
Nevertheless, the official said Justice Department attorneys “remain open” to further negotiations with AT&T.
Today’s announcement comes two weeks after a controversy erupted publicly over whether AT&T would have to sell off CNN to sidestep government concerns about the company’s plan to buy Time Warner.
According to Justice Department officials at the time, AT&T offered to divest from CNN and later sell the news network. The officials said they flatly rejected the offer.
However, the chairman and CEO of AT&T denied any of that ever happened.
"Throughout this process, I have never offered to sell CNN and have no intention of doing so," Randall Stephenson said in a statement provided to ABC News.
In a press conference late Monday afternoon, Stephenson addressed the speculation about CNN. "There’s been a lot of reporting and speculation about whether this is about CNN. And frankly I don’t know," he said.
He went on to say that the company would not be party to an agreement that would even give the impression of jeopardizing freedom of speech.
"We have no intention of backing down from the government’s lawsuit," Stephenson said. "... We are in this to win it."
The Trump administration has had a strained relationship with the news network.
The president previously labeled the network's journalism "fake" and "fraud" news, and he mockingly called the channel the "Clinton News Network" during last year's presidential race against Hillary Clinton.
Speaking with reporters today, the Justice Department official said his team was given no guidance from the White House about how to proceed and was not coordinating its own efforts with the White House.
“The relief we’re seeking today would CNN exactly where it is right now,” the official said.