Justice Department approaches states to block AT&T-Time Warner deal: source

Technology


WASHINGTON (Reuters) – The U.S. Justice Department has approached state attorneys general to try to win their support for a bid to block telecommunications powerhouse AT&T Inc’s $85.4 billion deal to buy media and entertainment company Time Warner Inc, a person briefed on the matter told Reuters on Wednesday.

It remained unclear which states the government had reached out to or whether any had agreed to join a potential lawsuit aimed at stopping the deal, which was announced in October 2016.

The deal has faced an antitrust review stretching more than a year and has become a political flashpoint because of Republican President Donald Trump’s vow as a candidate to block it and his repeated criticism of CNN, owned by Time Warner.

The source briefed on the matter said the department had reached out to a group of 18 state attorneys general that earlier opted to join the review to see if they wanted to join a lawsuit. State attorneys general have been assessing whether the deal could harm competition, and they interviewed industry officials this summer as part of the review, the source added.

The department failed to convince any states to sign on to a potential lawsuit, CNBC reported, citing sources. bit.ly/2A0xOrd. CNBC had previously reported that two states agreed to support the lawsuit.

The Justice Department potentially could file suit on its own to try to stop the merger. Its Antitrust Division often works with states on big, complex deals to figure out how a transaction would affect particular states. Once the department files a complaint, it typically does the bulk of the courtroom fight, not the states.

The Justice Department declined comment on the matter.

The AT&T logo is seen on a store in Golden, Colorado United States July 25, 2017. REUTERS/Rick Wilking

AT&T’s share price was up slightly on Wednesday at $33.91 while Time Warner slipped about half a percent to trade at $87.19 in morning trading.

Sources said last week that the Justice Department had demanded that AT&T divest DirecTV or Time Warner’s Turner Broadcasting unit, which includes CNN, in order to win approval of the deal.

Trump, just back from a trip to Asia, attacked the news network again on Wednesday morning, writing on Twitter: “While in the Philippines I was forced to watch @CNN, which I have not done in months, and again realized how bad, and FAKE, it is. Loser!”

U.S. Attorney General Jeff Sessions on Tuesday refused during congressional testimony to say whether the White House had contacted his department about its review of the deal.

Beyond worries over potential political influence in the department’s review, critics including Democratic lawmakers and consumer advocates have raised anti-competition concerns about a AT&T-Time Warner marriage.

The proposed merger would give AT&T control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted media assets. It raises concerns that AT&T might try to limit distribution of Time Warner content.

AT&T, the No. 2 U.S. wireless carrier and a major pay-TV provider, and Time Warner, have struggled to keep viewers who have been flocking to online services like Netflix Inc and Amazon.com Inc’s Prime Video.

AT&T wants to buy Time Warner so it can bundle mobile service with video entertainment and take online advertising from Facebook Inc and Alphabet Inc. Consumer groups and smaller television networks have said the deal would give AT&T too much power over the content it would distribute to its wireless customers.

Reporting by David Shepardson and Diane Bartz in Washington; Additional reporting by Supantha Mukherjee in Bengaluru; Editing by Bernard Orr and Will Dunham

Our Standards:The Thomson Reuters Trust Principles.



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