The U.S. Department of Justice is suing telecom giant AT&T in an attempt to challenge the carrier's plan to acquire media giant Time Warner.
AT&T first disclosed its intent to acquire Time Warner in October 2016 for $85.4 billion. The deal was poised to add several media properties to AT&T’s portfolio, including CNN, HBO, HBO Now and popular streaming service HBO Go.
The Justice Department''s lawsuit, which was filed in federal court Monday, claimed that the deal "would result in fewer innovative offerings and higher bills for American families."
For its part, AT&T immediately responded to the lawsuit Monday evening, saying in a statement that the claim was a "radical and inexplicable departure from decades of anti-trust precedent." The carrier called its planned acquisition a "vertical merger" that could benefit consumers, without removing a competitor from the market.
The lawsuit comes at time in which the Republican-led Justice Department and Federal Communications Commission have been viewed as being more merger-friendly than the former Democratic administration's regulation bodies. FCC Chairman Ajit Pai earlier this fall declined to review the merger between the two companies.
At the time AT&T revealed its merger plans, the provider said that Time Warner would represent about 15 percent of the combined company's revenue.
AT&T CEO Randall Stephenson said the Justice Deparment's claim that the deal would take away competition or cost consumers more money was not valid.
"I've done a lot of deals in my career, but I've never done one where we have disagreed with the Department of Justice so much on even the most basic of facts," he said. "The rule of law is at issue here."
Michael Bremmer, CEO of TelecomQuotes.com, a telecom consultancy firm and solution provider based in Moreno Valley, Calif., said that carriers like AT&T and Verizon have been scrambling to add more value beyond their basic connectivity services.
"I'm not sure the Time Warner purchase will affect the channel since it's a media asset, but as a consumer I don't think it's good for more media consolidation," Bremmer said.