Bloomberg, CNBC, and other outlets are reporting that the Department of Justice is setting itself up to announce a lawsuit that would block the AT&T merger with Time Warner.
Sources told CNBC that federal officials reached out to 18 state AGs and sent a draft complaint to at least seven of them, but so far no states have committed join the case. The DOJ is still likely to bring one, the sources said.
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CNBC earlier reported last week that the government could sue to block a transaction unless AT&T agrees to sell Turner Broadcasting, owner of the CNN cable news channel, or its DirectTV division. But the Justice Department has pushed back on the idea it is trying to force a sale of either of those assets, and AT&T's CEO has said he has no intention of selling CNN.
It will be interesting to see how this plays out as the Republican-led government has been very easygoing in its maneuvering to free up big companies (with terrible service records) to turn themselves into even larger monopolies. The legitimate argument against this merger is that while AT&T and Time Warner are in different businesses, they are in businesses closely tied to one another.
Critics of the AT&T-Time Warner deal have charged that the resulting entity would be in a position to give preferential treatment to its own media and entertainment holdings over that of its rivals. That has included AT&T services that allow wireless subscribers to view AT&T-owned content without it counting against data caps, while programming from rivals do not get the same “zero rating.” Also among the areas of concern to competitors has been the ability of a combined company to extract more leverage in negotiations for carriage of Time Warner’s Turner and HBO cable channels.
The practice of “zero-rating” is something the previous FCC investigated and found harmful to consumers.
Tom Wheeler may be leaving, but he's going out swinging. After grilling carriers Verizon and AT&T last month over their "zero-rating" policies, the FCC chairman released a report saying its practices harmed streaming rivals and, ultimately, consumers. It particularly singled out AT&T's Sponsored Data service, saying it "unreasonably interfere[s] with [rival services'] ability to compete against AT&T's affiliate, DirecTV."
The cynic in me wonders if Donald Trump is pushing his DOJ to threaten AT&T because he wants free wifi for his hotels.
