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Illustration: Rebecca Zisser / Axios

The U.S. Department of Justice is suing to prevent AT&T from completing its proposed $85 billion takeover of Time Warner, throwing the telecom giant's bet on becoming a media powerhouse in jeopardy. "Our investigation showed this is an illegal merger that would harm consumers," a DOJ official told reporters.

Why it matters: Antitrust regulators do not usually oppose so-called "vertical" mergers like this one, in which one company is buying another against which it doesn't really complete. But it is unclear if the change is philosophical, or related to President Trump's campaign statements against the deal and his subsequent criticism of Time Warner property CNN.

AT&T already was on record as saying it's ready to litigate, as it believes its future lies not only in distributing content, but also in producing it. The company's general counsel, David McAtee II, quickly said in a statement that the company is "confident" it will win in court. At a press conference after the suit was filed, CEO Randall Stephenson said the lawsuit pushed antitrust law past the "breaking point."

He also said AT&T won't sell CNN to get the deal approved. The DOJ official said earlier in the day that the White House had not communicated, to that person's knowledge, with the agency about the investigation.

Time Warner shares fell over 1% to close at $87.71 per share, compared to the $107.50 per share takeover price (which is to be paid in cash and stock).

The details:

  • AT&T's merger with Time Warner would result in higher prices and fewer options for consumers, the DOJ official said.
  • The DOJ official said that the combined company "would have the incentive and ability to charge more for Time Warner's popular networks" and that it could keep others out of the streaming video market.
  • The DOJ official said the agency remains open to finding an appropriate set of conditions to get the deal approved.
  • No state attorneys general have signed on to support the case. "We will prevail in court," said the DOJ official.

This post has been updated to incorporate the comments at AT&T's press conference.

Go deeper

Updated 4 hours ago - Politics & Policy

Giuliani associate Lev Parnas convicted of campaign finance crimes

Lev Parnas, a former associate of then-President Donald Trump’s personal lawyer Rudy Giuliani. Photo: Stefani Reynolds/Bloomberg via Getty Images

Florida businessman Lev Parnas was convicted Friday on charges of conspiracy to make foreign contributions to political campaigns, according to multiple outlets.

Why it matters: Prosecutors said Parnas, then an associate of former President Donald Trump's personal lawyer Rudy Giuliani, funneled over $150,000 from a Russian businessman into U.S. campaigns as part of an effort to land licenses in the U.S.'s legal cannabis industry.

Supreme Court agrees to hear challenges to Texas abortion law

Photo: Saul Loeb/AFP via Getty Images

The Supreme Court on Friday agreed to hear two cases challenging Texas' abortion law, which bans the procedure as soon as six weeks into pregnancy, but left the law in place in the meantime.

Why it matters: The court is moving extraordinarily fast on the Texas cases, compressing into just a few days a process that normally takes months. And that schedule means the court will take up Texas' ban a month before it hears another major abortion case — a challenge to Mississippi's own 2018 ban on abortions after 15 weeks.

Officials warn 5 key tech sectors will determine whether China overtakes U.S.

Illustration: Aïda Amer/Axios

U.S. intelligence officials responsible for protecting advanced technologies have narrowed their focus to five key sectors: artificial intelligence, quantum computing, biotechnology, semiconductors and autonomous systems.

Why it matters: China and Russia are employing a variety of legal and illegal methods to undermine and overtake U.S. dominance in these critical industries, officials warned in a new paper. Their success will determine "whether America remains the world’s leading superpower or is eclipsed by strategic competitors."