By: Gabriela Mejias *| Staff Writer
By Dwayne Bent from United States (Time Warner Center Uploaded by Niklem) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
On October of 2016, AT&T, Inc. and Time Warner Inc. announced
that AT&T would acquire Time Warner in an $85.4 billion transaction. This acquisition
was widely seen as the biggest of the year. Time Warner is a giant media and entertainment powerhouse that owns brands such as HBO, Turner Broadcasting (think CNN, TNT, TBS, and Cartoon Network/Adult Swim), and Warner Brothers. Given AT&T’s extensive network in mobile, broadband, and television distribution, this match
could change the face of access to the internet, news, entertainment, streaming services, and more.
The deal was planned to go through by the end of 2017, however, reports indicated that the Justice Department had a few issues with the proposed deal. The Justice Department instructed AT&T to sell either DirectTV or Turner Broadcasting, saying that an acquisition including these companies would raise costs for other entertainment companies and stifle competition. AT&T chief executive responded to that instruction in the negative, stating, “If we feel that litigation is a better outcome then we will litigate.”
Antitrust litigation is most commonly triggered by instances of horizontal acquisition. In horizontal acquisition, a company is merging with another company in a similar market sector and at the same stage of production. Because this involves the combination of two likely competing companies, it is at risk for creating reduced competition and a monopoly for that industry. This is where Justice Department antitrust litigation steps in.
Continue reading »