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Feds will sue to block AT&T from buying Time Warner

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.

Khorri Atkinson 10 hours ago
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Court strikes down motion to block new Pennsylvania congressional map

A Federal court on Monday refused to block new congressional district map in Pennsylvania, a significant blow to national and state Republicans who sought to halt it.

This is a developing story. Please check back for updates.

Zachary Basu 10 hours ago
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Pedestrian killed by self-driving Uber in Arizona

Uber autonomous
An Uber driverless Ford Fusion drives down Smallman Street on September, 22, 2016 in Pittsburgh, Pennsylvania. Photo: Jeff Swensen / Getty Images

A pedestrian was struck and killed by a self-driving Uber in Tempe, Arizona, early Monday morning, according to ABC15. Tempe police said that the vehicle was in autonomous mode, though a safety driver was behind the wheel at the time of the crash.

Why it matters: The New York Times notes that this could be the first pedestrian ever killed by a self-driving vehicle. Uber says it's closely following its incident response process, though it declined to share more details about what that entails. The company has also paused its self-driving cars in all locations (Pittsburgh, Tempe, San Francisco and Toronto).