U.S. Markets closed

U.S. sues to stop AT&T buying Time Warner, says would hike rates

By Diane Bartz and David Shepardson

WASHINGTON (Reuters) - The U.S. Department of Justice sued AT&T Inc (T.N) on Monday to block its $85.4 billion acquisition of Time Warner Inc (TWX.N), saying the deal could raise prices for rivals and pay-TV subscribers while hampering the development of online video.

The lawsuit is the first major challenge to a merger by the administration of U.S. President Donald Trump, who has repeatedly criticized Time Warner's CNN news unit and announced his opposition to the deal before the election last year, saying it would concentrate too much power in AT&T's hands.

The Justice Department is arguing that AT&T would use Time Warner's films and movies to force rival pay-TV companies to pay "hundreds of millions of dollars more per year for Time Warner's networks" in the lawsuit filed late Monday in federal court in Washington.

The government cited documents where AT&T and its satellite broadcast unit DirecTV described the traditional pay-TV model as a "cash cow" and "golden goose," suggesting customers were at risk of price hikes.

The 23-page complaint also said the deal would slow the industry’s transition to online video and other new distribution models.

AT&T, which sees the deal as a way to compete against emerging technology companies such as Netflix Inc (NFLX.O) and Amazon.com Inc's (AMZN.O) Prime Video, described the lawsuit as "a radical and inexplicable departure from decades of antitrust precedent.”

AT&T head lawyer David McAtee said so-called vertical mergers, between companies on different steps in a supply chain, are routinely approved.

"We see no legitimate reason for our merger to be treated differently,” said McAtee, adding that AT&T is confident a judge will reject the Justice Department’s case. The Obama administration approved a similar vertical deal in 2011 to allow cable company Comcast Corp (CMCSA.O) to acquire NBCUniversal.

The legal challenge ramps up hostilities after AT&T rejected the Justice Department's demand earlier this month to divest DirecTV or Time Warner's Turner Broadcasting - which contains news network CNN - in order to win antitrust approval.

The move may be a sign that the Trump administration will look closely at other big mergers.

Time Warner's shares dropped 1.1 percent to close at $87.71, while AT&T shares closed up 0.4 percent at $34.64.

The deal has been a political lightning rod since it was hatched in October 2016. During his campaign, Trump said that reporters covered him unfairly and has continued to attack CNN as president, which he has labeled as "fake news." He has not commented on the AT&T deal since his inauguration in January.

U.S. Attorney General Jeff Sessions declined to say last week if anyone from the White House had discussed the merger with any Justice Department officials.


VIDEO BUNDLING

The No. 2 U.S. wireless carrier is trying to buy Time Warner, which also owns the premium channel HBO and movie studio Warner Bros, so it can bundle video entertainment on its mobile service.

The Justice Department's lawsuit cited internal Time Warner documents that said long-term contracts to host live sporting events like college basketball and baseball would help allow it to achieve "targeted rate increases."

The lawsuit also said AT&T and Comcast, which control almost half of the pay-TV market, "would have an increased incentive and ability to harm competition by impending online competitors they consider a threat."

The complaint's focus on raising the costs of DirecTV's rivals and hampering the move to online video is consistent with normal antitrust concerns, said Henry Su, a partner in the law firm Constantine Cannon.

"The theories that are being espoused (in the complaint) are not out on the edge or untested theories. They're espousing what we consider traditional theories of vertical harm," said Su. "It doesn't look like a stretch."

Aside from Trump and the Justice Department, the deal is also opposed by an array of consumer groups and smaller television networks.

"Blocking this merger is the right thing to do - and we hope the Justice Department is doing it for the right reasons," said Craig Aaron, president of advocacy group Free Press, which opposes media industry consolidation.

Last week, the Justice Department had approached 18 state attorneys general asking them to join the challenge, but as of Monday none had publicly agreed to do so, Reuters reported.

Democratic state attorneys general tend to join antitrust lawsuits and may be hesitant to work with Trump's Justice Department while traditional Republican state attorneys general would be skeptical of a lawsuit to stop a vertical merger, said Seth Bloom, a veteran of the Justice Department who is now in private practice.

"In a complaint of this sort, it would be expected that state AGs would sign on to it," he said. "I don't know if it ultimately will mean anything."


(Reporting by David Shepardson and Diane Bartz; Editing by Bill Rigby)

  • Nucor posts strong quarter despite impairment charge
    Finance
    American City Business Journals

    Nucor posts strong quarter despite impairment charge

    Nucor Corp. reports earnings of $676.7 million, or $2.13 per diluted share, for the third quarter after taking a $110 million impairment charge to write down the value of natural gas assets it owns. This quarter was significantly better than the third quarter last year, when Nucor posted earnings of $254.9 million, or 79 cents per share.

  • Finding a Cure for Kinder Morgan’s Frustration
    Business
    Bloomberg

    Finding a Cure for Kinder Morgan’s Frustration

    Rising profits – Ebitda was up 6 percent, year over year – and that Canadian pipeline sale have helped address Kinder Morgan’s biggest problem, its crushing debt. Thankfully, it provided a strong signal on Wednesday evening that it would.

  • Is Tilray a Better Marijuana Stock to Buy Than Aurora Cannabis?
    World
    Motley Fool

    Is Tilray a Better Marijuana Stock to Buy Than Aurora Cannabis?

    Marijuana users are cheering the legalization of marijuana for recreational use in Canada, but it's not just pot advocates who are excited. Investors are also upbeat because the recreational market for marijuana represents a massive opportunity for sales growth for leading Canadian cannabis companies, including Tilray Inc. (NASDAQ: TLRY) and Aurora Cannabis (NASDAQOTH: ACBFF). Medical marijuana has been legal in Canada for years, and while medical marijuana sales total in the hundreds of millions of dollars annually, the potential market opportunity associated with recreational use is significantly bigger.

  • What happens if you win Mega Millions' $970M jackpot?
    News
    Associated Press

    What happens if you win Mega Millions' $970M jackpot?

    Despite the terrible odds — one in 302.5 million for those keeping score at home — someone will eventually match all six numbers and win the Mega Millions jackpot, which now stands at $970 million. Here are some answers for someone holding that prized lottery ticket for what would be the second-largest lottery jackpot in U.S. history. Lottery officials recommend winners take a deep breath, put their winning ticket in a safe spot and consult with a reputable financial planner before popping over to the lottery headquarters.

  • Call of the day: Netflix
    Business
    Yahoo Finance Video

    Call of the day: Netflix

    Netflix, got not one but two downgrades despite an upbeat earnings report. 

  • China to launch artificial 'moon' into orbit to light up city 
    Science
    The Telegraph

    China to launch artificial 'moon' into orbit to light up city 

    China is to launch a fake "moon" into space that it hopes will illuminate one of the country's biggest cities. Officials in Chengdu, a city of 14 million people in China's southwestern province of Sichuan, announced plans to place a satellite in orbit

  • Provocateur Stormy Daniels Takes an Unexpected Turn in the National Spotlight
    Politics
    Time

    Provocateur Stormy Daniels Takes an Unexpected Turn in the National Spotlight

    To understand what it means to be famous like Stormy Daniels, for the reasons she is famous, spend time with her in a public space. On Oct. 15, a California judge threw out the defamation case she filed against Donald Trump. Over the past year, Daniels, 39, has become the Zelig of White House scandals.

  • The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs
    News
    MarketWatch

    The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs

    When the media and investors turn negative on stocks but the “smart money” is bullish, it’s a good time to think about buying. After all, exactly what is the smart money, and how do you know? Lately, several fund managers who pass this test have been pounding the table on Chinese internet names.

  • Better Buy: GlaxoSmithKline plc vs. Eli Lilly
    Business
    Motley Fool

    Better Buy: GlaxoSmithKline plc vs. Eli Lilly

    People get sick regardless of the economic cycle, so companies that cater to healing them often outperform during downturns, and their stocks are considered "defensive." Healthy and dependable dividends can also contribute to stabilizing portfolio returns in good times and bad. Two successful blue-chip stocks in the healthcare industry are British GlaxoSmithKline plc (NYSE: GSK) and Eli Lilly (NYSE: LLY). Investors like both stocks for their dividends and consistent performance, but the companies are really quite different, with GlaxoSmithKline diversified into vaccines and consumer products, and Eli Lilly focused on pharmaceuticals.

  • Ford Motor Company Earnings: What to Watch For
    Business
    Motley Fool

    Ford Motor Company Earnings: What to Watch For

    Ford Motor Company (NYSE: F) will report its third-quarter earnings results after the markets close on Oct. 24. Wall Street analysts polled by Thomson Reuters expect Ford to report earnings of $0.30 per share, on average, down from $0.43 in the third quarter of 2017. Ford's F-Series pickups continue to sell well and generate good profits, thanks to high-margin versions like this F-150 Limited.

  • Here's everyone who has dropped out of Saudi Arabia's 'Davos of the Middle East'
    Finance
    Yahoo Finance

    Here's everyone who has dropped out of Saudi Arabia's 'Davos of the Middle East'

    U.S. Treasury Secretary Steven Mnuchin tweeted Thursday that he will not be attending the Future Investment Initiative in Saudi Arabia next week. The news comes after prominent members of the world’s business community have been dropping out of Saudi

  • United Airlines Reports Another Quarter of Strong Earnings -- for United
    Business
    Motley Fool

    United Airlines Reports Another Quarter of Strong Earnings -- for United

    Over the past year or so, I've been rather skeptical about United Continental's (NYSE: UAL) plan to boost its earnings by accelerating its growth rate, particularly in smaller cities. Indeed, United Airlines released another strong earnings report on Tuesday afternoon and raised its full-year guidance for the third consecutive quarter. It now expects to post full-year adjusted earnings per share of $8.00 to $8.75 -- up from an initial guidance range of $6.50 to $8.50 -- even though it is on track to spend an extra $700 million on fuel compared to its original forecast.

  • Business
    CNBC

    Goldman Sachs sees a correction coming for chipmakers but still likes Nvidia

    "We foresee a cyclical correction approaching and recommend investors to stay selective in Semis," Goldman Sachs said in a note Thursday. Nvidia is Goldman's top choice in the industry. Goldman Sachs warned clients about a downturn coming for the semiconductor sector, but still recommends some chip stocks.

  • Android phones are about to completely change as Google plans to charge for apps
    Technology
    The Independent

    Android phones are about to completely change as Google plans to charge for apps

    The world's most popular mobile operating system may soon look very different after Google announced that smartphone manufacturers will no longer have free access to popular apps on Android. The licensing fee charge for the Play Store and other Google apps follows a $5 billion fine handed to the technology giant by the European Commission for antitrust violations earlier this year. Until now, Android phones and tablets have all come pre-installed with Google's search engine and Chrome browser, a move that European lawmakers deemed illegal.

  • Uber driver charged with kidnapping New York woman
    News
    Associated Press

    Uber driver charged with kidnapping New York woman

    An Uber driver in New York City kidnapped a woman who fell asleep in his vehicle, groped her in the back seat and then left her on the side of a highway in Connecticut, federal authorities said Tuesday. Harbir Parmar, 24, of Queens, was charged in U.S. District Court with kidnapping. "The presumption of innocence remains with my client," Parmar's lawyer, Susanne Brody, told The New York Times at the courthouse after the hearing.

  • The same question that can chart a path to early retirement is the one Warren Buffett used to build Berkshire Hathaway into a powerhouse
    Business
    Business Insider

    The same question that can chart a path to early retirement is the one Warren Buffett used to build Berkshire Hathaway into a powerhouse

    Inversion is a mental model that involves flipping your outlook to prevent the opposite of what you want to happen from happening. Warren Buffett and his business partner Charlie Munger employed inversion as a business strategy to build Berkshire Hathaway into a powerhouse. In a recent podcast with Brandon of the Mad Fientist, who retired early at 34, productivity expert James Clear said the same strategy Buffett used can help set someone on the path for early retirement.

  • Employee Accused of Urinating on Production Line at Food Processing Facility
    Business
    WTKR - Norfolk

    Employee Accused of Urinating on Production Line at Food Processing Facility

    Smithfield Foods, Inc. said in a statement Tuesday that it disposed of more than 50,000 pounds of product after reports of an employee urinating at his station at the company’s processing facility in Virginia.

  • How the Murder of Jamal Khashoggi Could Upend the Middle East
    World
    Time

    How the Murder of Jamal Khashoggi Could Upend the Middle East

    Before the world even learned his age, it could glean that the young man who runs Saudi Arabia takes extraordinary chances with violence. Mohammed Bin Salman, the prince now known by the global shorthand of MBS, was utterly unknown when his father ascended to the Saudi throne in January 2015. It was a routine transfer of power from one elderly royal to another, until King Salman delegated a massive share of his authority to his son.

  • For Nestle and Unilever, No News Is Good News
    Business
    Bloomberg

    For Nestle and Unilever, No News Is Good News

    Unilever and Nestle, two of Europe's biggest consumer giants, managed to report sales growth that broadly matched analyst estimates on Thursday. Of the two, Marmite-maker Unilever is under the greater pressure to produce better operating results after promising to revive its performance after spurning a generous takeover approach. After successfully fending off Kraft Heinz Co. last year, the Anglo-Dutch conglomerate had planned to simplify its structure into a single holding company in the Netherlands, a move that would have given it more scope to grow through M&A. This month, CEO Paul Polman had to abandon that plan amid opposition from big U.K. shareholders.

  • Musk’s Big China Play Comes as World’s Top Car Market Slows
    Business
    Bloomberg

    Musk’s Big China Play Comes as World’s Top Car Market Slows

    Acquiring the parcel keeps Tesla on track to spend several billion dollars on its first overseas plant in the world’s largest electric-vehicle market. President Donald Trump’s trade war with China has led to higher Chinese tariffs on American imports, stoking concern about an economic slowdown. Tesla fell 1.7 percent to $271.78 in New York trading Wednesday.

  • Why the Earnings Surprise Streak Could Continue for Humana (HUM)
    Business
    Zacks

    Why the Earnings Surprise Streak Could Continue for Humana (HUM)

    Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Humana (HUM), which belongs to the Zacks Medical - HMOs industry, could be a great candidate to consider. When looking at the last two reports, this health insurer has recorded a strong streak of surpassing earnings estimates.

  • Ford's giving a few more people a chance to buy its $500K GT supercar
    Finance
    American City Business Journals

    Ford's giving a few more people a chance to buy its $500K GT supercar

    Ford Motor Co. is planning to make a few more of its ultra-expensive GT supercars. Citing "unprecedented" demand, the automaker (NYSE: F) on Thursday said it's increasing the production of the Ford GT from an initial run of 1,000 cars to 1,350 cars. The car doesn't come without its problems: Last week, Ford said it's recalling about 200 of the cars it's made so far because there's a risk they might catch on fire.

  • Why Winnebago Stock Surged 17% -- Then Gave Most of It Back
    Business
    Motley Fool

    Why Winnebago Stock Surged 17% -- Then Gave Most of It Back

    Shares of RV-maker Winnebago Industries (NYSE: WGO) leapt 17.6% in early trading after the company reported earnings Wednesday, before retreating to a more recent price up just 5% from yesterday's close. For its fiscal fourth quarter of 2018, Winnebago reported $0.94 per share in earnings, exceeding expectations for $0.86, on sales of $536.2 million. Motorhome sales slowed, but towables were a bright spot for Winnebago in Q4.

  • Aurora Cannabis stock leads sector higher after news it will start trading on NYSE next week
    News
    MarketWatch

    Aurora Cannabis stock leads sector higher after news it will start trading on NYSE next week

    Canadian marijuana company Aurora Cannabis Inc.’s shares rose about 4% Thursday after it said shares have been approved for trading on the New York Stock Exchange starting October 23. The stock (CA:ACB)(CA:ACB) which is currently trading on the over-the-counter market, will trade under the ticker symbol “ACB”. The shares are also traded on the Toronto Stock Exchange.

  • Jamal Khashoggi Was My Co-Writer and My Friend. Here's the Last Thing He Told Me
    Business
    Time

    Jamal Khashoggi Was My Co-Writer and My Friend. Here's the Last Thing He Told Me

    Everyone at the mission, including Jamal’s boss, Prince Turki, the Saudi intelligence chief turned ambassador, referred to him fondly as Uncle Jamal. Jamal was always on the inside track, at some of the very highest levels–and the power of his critique as an informed insider likely contributed to his fate. On that July morning earlier this year, Jamal wanted to talk to me about one of the articles we had composed together for the Washington Post in his early months of exile: “What Saudi Arabia’s Crown Prince Can Learn From Queen Elizabeth II.” Mohammed bin Salman (MBS) had been due for an audience that March in Buckingham Palace on his way to Washington.