The U.S. Justice Department is suing to stop AT&T's multi-billion dollar bid to take over another communications giant, Time Warner, calling it illegal and likening it to extortion.
"The $108 billion acquisition would substantially lessen competition, resulting in higher prices and less innovation for millions of Americans," a Justice Department statement said Monday.
"The combined company would use its control over Time Warner's valuable and highly popular 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."
CNN, HBO top Time Warner products
Time Warner's products include CNN, HBO, TNT, The Cartoon Network, and Cinemax — these networks broadcast highly popular newscasts, movies, comedy and drama series, and sports.
AT&T and its subsidiary DirectTV distribute these programs, as well as others, thorough cable and satellite.
The Justice Department decries the possibility of AT&T not just controlling television productions, but also the means of bringing them into people's homes.
In its lawsuit, it threw AT&T's words right back at the communications giant, noting that AT&T recognizes that distributors with control over the shows "have the incentive and ability to use ... that control as a weapon to hinder competition."
It also cited a DirectTV statement saying distributors can withhold programs from their rivals and "use such threats to demand higher prices and more favorable terms."
Assured transaction would be approved
AT&T's CEO Randall Stephenson told reporters the Justice Department's lawsuit "stretches the reach of anti-trust law to the breaking point."
He said the "best legal minds in the country" assured AT&T that the transaction would be approved and said the government is discarding decades of legal precedent.
AT&T and Time Warner are not direct competitors, and AT&T says government regulators have routinely approved such mergers.
President Donald Trump has made no secret of his contempt for one of Time Warner's crown jewels — CNN, the Cable News Network — because of his perception of CNN being a liberal biased provider of "fake news," including direct attacks against his administration.
Trump vowed during last year's presidential campaign to block the merger.
Stephenson called the matter "the elephant in the room," saying he said he "frankly does not know" if the White House disdain for CNN is at the heart of the Justice Department lawsuit.
But he said a proposal that Time Warner sell-off CNN as part of a settlement with the Trump Justice Department would be a "non-starter."