AT&T-Time Warner Merger: Justice Department Not Stopping Acquisition

The United States Department of Justice has reportedly entered “advanced stage” in its review of telecommunications giant AT&T’s potential acquisition of Time Warner, according to the Wall Street Journal.

News of the review suggests the merger of AT&T and the Time Warner will be allowed to be completed despite promises made on the campaign trail by then-candidate Donald Trump that he would block the merge if elected.

The Department of Justice is reportedly discussing conditions of the merger with AT&T, a process designed to put limitations on the newly formed mega-company that will be comprised of AT&T’s sizable telecommunications arm and Time Warner’s large library of content.

If the Justice Department finds any potential harms the purchase may cause—including creating uncompetitive or monopoly-like conditions—cannot be offset by conditions, it can sue to block the merger, though that outcome appears unlikely under the Trump administration.

Currently of interest for the Justice Department is ensuring AT&T doesn’t discriminate against content or channels that would compete with Time Warner. The government may place conditions on AT&T that would prevent it from favoring Time Warner channels in its marketing or pricing, thus preventing the company from advantaging its own properties.

Such efforts would typically also draw ire from the Federal Communications Commission, which would oppose similar favoritism in home and mobile internet offers. AT&T could offer its subscribers the ability to stream Time Warner channels without it counting against their data limits, for example—a practice known as zero rating.

However, the FCC—now under the leadership of Donald Trump appointee Ajit Pai—has taken little interest in the merger attempt. While Chairman Pai promised to keep an eye on the merger in order to maintain a competitive marketplace, the deal was not presented to the commission and Pai made no apparent effort to review it.

The merger talks have also placed under scrutiny AT&T’s ability to control customer data and use it in targeted advertising campaigns. Regulators may require AT&T make that data available to competitors at a “reasonable cost.”

Last month, Democrats in the U.S. Senate sent a letter to Attorney General Jeff Sessions advocating the Justice Department take action to block the proposed merger, arguing it would allow AT&T to “engage in a wide variety of behaviors that would harm competition in the media market.”

It once appeared the Democrats would have an ally in President Donald Trump on this issue, as he promised on the campaign trail to block the merger attempt. At the time, he said AT&T’s purchase of Time Warner was "a deal we will not approve in my administration because it's too much concentration of power in the hands of too few."

While the Trump administration has reportedly discussed using the merger review as a tool to gain leverage on CNN, a Time Warner property that the President has regularly clashed with, there has been no effort by President Trump to intervene with the deal.