AT&T confirms DOJ lawsuit to block $85B Time Warner deal

CEO Randall Stephenson said AT&T will not be party to any agreement that would “even give the perception of compromising the First Amendment.”

AT&T CEO Randall Stephenson yesterday confirmed that the U.S. Justice Department has filed suit to block his company’s $85 billion merger with Time Warner, and he expressed misgivings about the agency’s motives.

“I’m a bit troubled by it,” said Stephenson, promising that as the companies head to court they will continue to offer solutions that will allow this merger to close.

“We do not intend to settle this matter out of simple expediency because the rule of law is at issue here. Consistence in the application of the law is critical in a free market economy and it’s equally important for preserving confidence in our government, confidence that they will fairly adjudicate the matters brought before them. When the government suddenly, and without any notice or due process, discards decades of legal precedent, businesses large and small are left with no guideposts. Every business combination or significant investment becomes subject to the whim of a regulator. As we’re seeing here, that tends to be a roll of the dice,” said Stephenson.

Stephenson called CNN the “elephant in the room” and admitted that he didn’t know if the lawsuit was because of the network. “But nobody should be surprised that the question keeps coming up because we witnessed such an abrupt change in the application of antitrust law here.”

Stephenson said AT&T will not be party to any agreement that would “even give the perception of compromising the First Amendment” and promised AT&T and Time Warner would not give up control of CNN, either directly or indirectly.

“We have no intention of backing down from the government’s lawsuit. We’re in this to win and absent a reasonable compromise that doesn’t violate our principles, we expect to do just that,” said Stephenson.

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Daniel Petrocelli, AT&T’s retained counsel from O'Melveny & Myers, continually said today that the burden now falls to the DOJ to prove the merger will harm consumers.

AT&T didn’t directly mention President Donald Trump, but it did make a point to call out what it said were inconsistencies in Trump appointees' views of the merger. AT&T played a tape of Assistant Attorney General Makan Delrahim calling the AT&T-Time Warner deal a vertical merger and saying it won’t be a “major antitrust problem.” Since then, Delrahim has taken over the DOJ’s Antitrust Division and signaled a push for structural remedies instead of behavioral remedies when issuing conditions for approval.

For its part, the DOJ is arguing that AT&T will use its control over Time Warner's valuable and popular networks and programming -- which includes TBS, TNT, HBO and CNN, along with shows including "Game of Thrones" and NCAA March Madness -- to hinder its rivals by making them pay hundreds of millions more for that programming. The agency also argues that AT&T would use its market control to slow innovation in video delivery, which would limit choices for American households and in turn cause service costs to rise.

“This merger would greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy,” said Delrahim in a statement.  “AT&T/DirecTV’s combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction.”