AT&T-Time Warner Deal 'Not Good for the Country'

AT&T-Time Warner Deal 'Not Good for the Country'

One key asset owned by Time Warner, CNN, could create problems for the USA and President Donald Trump, whose very public spat with the news network has raised suspicions that he might have interfered with the department's decision. "Everyone on Wall Street feels like they're missing something here".

"A merger between AT&T and Time Warner is a bad deal for consumers and the DOJ is making the right decision by rejecting it", Schwantes says, adding that combining the two companies would "create a massive telecommunications and media company with its fingers in nearly every pot of these increasingly connected industries".

AT&T had planned to fight the government's decision in court at that time, but later dropped the deal and swallowed billions in costs.

The last time the USA government won a court victory in a vertical merger antitrust case was in 1972, when the Supreme Court said Ford's takeover of a spark-plug business violated antitrust law. If denied, it could set a new precedent for how similar mergers are approached. As president, Trump has often blasted CNN for its coverage of him and his administration, disparaging it and its reporters as "fake news".

He also addressed whether he thought CNN was a factor in the DOJ decision. But Stephenson said AT&T would not agree to anything that would result in it losing control of CNN.

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.

The DOJ filed suit over the AT&T Inc.

As a candidate, however, Trump vowed to block the pending AT&T-Time Warner deal because it would concentrate too much "power in the hands of too few".

AT&T has long maintained that acquiring Time Warner would benefit consumers, saying that pairing Time Warner's content with AT&T's distribution will foster innovation, disrupt the current pay-TV industry, and make TV more affordable for consumers due to targeted advertising and the elimination of traditional all-in-one cable bundles.

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Consumer advocates, including Consumers Union, the policy and mobilization division of Consumer Reports, applauded the DOJ's action.

The deal instantly became a political lightning rod.

The consumer advocacy group Free Press likewise praised the DOJ action, but its president, Craig Aaron, objected to Trump's "saber-rattling" against CNN and other outlets that air criticism of the administration. Sinclair is a conservative-leaning company.

Still, the Comcast deal didn't come without strings: regulators imposed several conditions meant to stop the company from using its new power to quash upstarts like Netflix.

Market confidence in the deal closing went from around 80 percent to around 30 percent, according to Samir Kapadia of VogelHood Group, which uses public data to predict future USA government actions for investors, industry groups and others.

In 2011 the company tried to buy T-Mobile for $39 billion, but abandoned the idea after the Obama Justice Department sued to block it.

"AT&T made it clear that they are "in this to win" and don't intend to cut their losses by walking away", Morgan Stanley analysts wrote in a note. They closed on Monday some 18 percent below the implied value of AT&T's $107.50 per share cash and stock offer, suggesting that investors have doubts about the company's ability to close the deal.

Sadie Gurman contributed from Washington.