The DOJ puts its gloves on to fight the most recent AT&T acquisition
November 12th, 2017 10:58 pm | By admin | Posted In Business News
The fight is on for AT&T after the Department of Justice has put a stop to its most recent endeavor to acquire Time Warner Inc., the prestigious corporation that owns many relevant media outlets such as Turner Broadcasting, along with an important subsidiary: CNN.
The deal, valued at $85 billion, is an important one for the industry, as it merges both broadcasting power and high-quality content. The completion of this deal will mean that AT&T will become the owner of series such as Game of Thrones, something that goes along with the most recent strategic movements within the industry that aim towards a distribution plus content-creation approach.
Competitors such as Netflix have also engaged in producing original content, and this is what AT&T is probably aiming at. The company’s CEO said in a press release regarding the transaction that “This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors, and advertisers”.
A great deal for AT&T indeed, but, many critics have raised their concerns about a potential increase in prices, as alternatives for consumers start to shrink; additionally, others are also worried about content neutrality, as AT&T could use its massive distribution channels to prioritize their in-house content.
Apparently, the government shares some of these views, as the DOJ has raised a war flag on Wednesday, according to a report from the Financial Times that cited three sources with direct involvement in the negotiations.
The DOJ is demanding the sale of major Time Warner assets such as CNN or DirecTV to get the green light, but AT&T has said in many occasions that they are not willing to do that as, in their view, the deal doesn’t violate fair competition rules.
Lawyers are probably setting up their calculators in place already, as things might end up in court.
This news hasdefinitely shaken AT&T’s timetable on the deal, which was expected to be settled by the end of this year. In this regard, the company’s Chief Financial Officer has commented that “the timing of the closing of the deal is now uncertain”.
Such complications have raised a few eyebrows, as the head of the Antitrust Division of the DOJ, MakanDelrahim, declared in 2016 during a TV interview that the deal wasn’t“a major antitrust problem”.
The question many are asking now is: is this a legitimate antitrust concern? Or is it the result of the current administration’s rivalry with CNN?The President is surely an adversary of CNN’s coverage and comments during his campaign. Something that could be easily picked up by reading a few of his tweets where he calls the company “fake news”.
Whether political retaliation or pure law enforcement, investors have reacted negatively to the news. Time Warner shares were down 6% after the report went public.
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