The United States Department of Justice is concerned about the implications of AT&T's proposed acquisition of Time Warner and how such a move could hurt innovation in the industry, whereas the wireless carrier is ready to take the federal government to court over the matter, Reuters reported on Thursday. Another related concern the DOJ supposedly has about the deal pertains to its potential to result in rising costs for other media distributors in the country, a notion that AT&T repeatedly dismissed. The second largest mobile service provider in the U.S. allegedly opposes any kind of divestitures suggested by the DOJ which is said to have attempted pressuring the company into either selling its existing DIRECTV division bought two years ago for $49 billion or divesting Turner Broadcasting, Time Warner's media unit consisting of CNN and other cable channels.
The DOJ was previously said to be preparing for potential litigation with AT&T, with recent reports giving more credence to that possibility. The Dallas, Texas-based telecom giant remains adamant that its 85.4 billion acquisition is a vertical merger that wouldn't hurt the industry in any palpable way, with various consumer protection organizations and other advocacy groups arguing that the company would be naturally discouraged to treat Time Warner's content and media from its rivals as equals when it comes to distributing both to nearly 140 million of its wireless subscribers in the United States.
The DOJ is the last regulator that needs to approve AT&T's proposed Time Warner merger before the deal can go through, but the federal agency has been handling the case in an extremely careful manner ever since the two companies announced their consolidation intentions in late 2016. Its antitrust department's prolonged review of the transaction already dragged on for longer than most industry watchers anticipated, ultimately prompting AT&T to delay its estimated closure window for an unspecified period of time. The latest development gives more credence to previous reports that the two still aren't close to reaching a deal that's of large importance to AT&T's long-term strategy entailing a major diversification of its operations aimed at alleviating the impact of the stagnating wireless market in the country.