AT&T rips Justice Department in court filing for holding up Time Warner merger

Image: People pass an AT&T store in New York's Times Square
People pass an AT&T store in New York's Times Square on Oct. 21, 2014.Richard Drew / AP file

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By Claire Atkinson

Phone giant AT&T tore apart Justice Department antitrust arguments in a court filing released on Tuesday aimed at rescuing its currently blocked proposed $84 billion merger with media giant Time Warner.

Responding in a filing in the U.S. District Court of Washington, D.C., AT&T argued that the Department of Justice is ignoring the flood of tech cash into the online video sector when it argues the two firms getting together would hurt competition in the pay-TV world.

The Justice Department argues that owning Time Warner would hurt rivals because AT&T would likely raise prices on its channels, which include HBO, CNN, TNT and TBS, among others, and therefore force rivals such as satellite player Dish Network, for instance, to pass those costs along to consumers or risk going without the services — causing subscribers to flee, perhaps to the AT&T-owned DirecTV.

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But AT&T argues that the DOJ seems to be ignoring a major source of competition.

"While incumbent cable companies continue to lead in the delivery of television programming to homes across the country, massive digital platforms are harnessing the power of vertical integration to bring premium video content directly to consumers' internet connected TVs, phones and tablets," the filing stated.

The court filing noted that traditional competitors aren't the only competitors the Justice Department should look at when weighing the effects of the merger.

AT&T pointed to Netflix, which intends to spend $17 billion over the next few years on streaming content. "Apple, Google, and Facebook, with billions of users and a combined market capitalization of more than two trillion dollars, are likewise investing billions of dollars in their own video offerings."

The Trump administration had asked AT&T to consider divesting a major unit, perhaps Turner Broadcasting, which runs CNN, to remedy their concerns, but AT&T declined.

The two sides are also fighting over the timing of a court date for their arguments before a federal judge: The Justice Department wants a start date in May, while AT&T argues that their agreement with Time Warner will expire in April, costing them $500 million. The telecom giant wants a February hearing.