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Today, the Department of Justice filed a lawsuit against the proposed merger of AT&T and Time Warner. Public Knowledge supports this lawsuit because this $108 billion merger would harm the American public by inflating prices, harming competition, and reducing programming opportunities for diverse media voices.
The following can be attributed to Public Knowledge President Gene Kimmelman:
"We welcome this effort by the Department of Justice to protect competition in the video industry. Ever since this deal was announced, we sounded the alarm on the dangers it could pose to consumers, and it is gratifying to see antitrust enforcers respond.
“This case will now be argued before a federal judge on its own merits. Although there is some controversy over the political environment surrounding the transaction, media consolidation in general and this transaction in particular is not in the interest of the American public. The Department of Justice has drawn a line in the sand against this violation of the Clayton Act, and we believe the courts will side with the government by preventing further media consolidation that drives up prices for consumers and undermines the competitive marketplace of ideas.
“Antitrust agencies have a long history of addressing the dangers inherent in mergers between programmers and video distributors. For example, the Department of Justice filed suit to stop the Comcast-NBC Universal deal and a consent decree approved by a federal judge imposed conditions on that deal designed to protect competition. Likewise, the Federal Trade Commission filed suit to block the acquisition of Turner Broadcasting by Time Warner (which was then both a cable TV company as well as a programmer) in 1996, reaching a settlement that prevented discrimination and required some divestitures.
“Even more than those past deals, a merger between AT&T and Time Warner poses serious dangers to consumers. AT&T/DIRECTV is the largest provider of traditional video programming. Time Warner owns many of the most popular cable channels, as well as a huge library of content essential for any online streaming service or traditional cable/satellite distributor. The combined company would have the incentive and ability to harm rival video distributors and programmers, threatening the competitive future of online video, while giving the new company the ability to withhold programming or drive up prices for other satellite and cable players. The merged company also would have the ability and incentive to favor HBO over other premium channels, undermining competition and diversity in the video market. Finally, the deal will continue the unhealthy trend of media consolidation that keeps driving prices higher while shrinking the availability of independently owned programming.
“We support the Department of Justice in this effort to promote competition and protect consumers.”