The government's objections to the deal surprised many on Wall Street. Rumblings that regulators had serious concerns about the deal only surfaced in the past couple of weeks.
Even the US government's leading antitrust enforcer - Makan Delrahim, a competition lawyer who arrived at the DOJ this summer - at first expressed an openness to the merger. "You have to go back half a century to find a DoJ victory in this area".
AT&T and Time Warner are not direct competitors, but the lawsuit alleges that the $108 billion acquisition would substantially lessen competition - allowing AT&T to have distribution control over Time Warner's popular television programming.
The justice department has said that the merger, valued at US$85 billion, will reduce competition and raise prices for consumers.
A source who confirms the DOJ's move to Politico said that that the government's main sticking point is CNN, which has become perhaps the most prominent of the president's media punching bags. Comcast, the US's largest broadband provider, took over NBC Universal, owner of the NBC network and Universal Studios in 2009 and that deal has been roundly criticised by senators who believe Comcast has used its cable dominance to quash competition. He's also spoken out about the deal in less personal terms, telling reporters, "AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration, because it's too much concentration of power in the hands of too few".
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The government's move claiming a violation of Section 7 of the Clayton Act comes after unsuccessful negotiations explored whether AT&T could do anything to satisfy government concerns.
What to watch: The Justice Department said 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.
'We'll look at breaking that deal up and other deals like that.
David McAtee, AT&T's general counsel called the suit "a radical and inexplicable departure from decades of antitrust precedent".
The impact: If DoJ loses the case, it could spur a flood of consolidation. Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market.
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The legal fight may also bring a new focus on the question of media competition and the size of the most powerful players - notably Google and Facebook.
Stephenson noted that these companies, in addition to Netflix, are also creating original content yet have so far been unchallenged by antitrust cops.
DOJ lawsuits often sound the death knell for a deal. "Their media advertising, content and distribution dominance will be a defense at trial". "AT&T/DirecTV's combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction".
"In the end, this is about law enforcement", he said.
Yet looming large over the merger - and now, the court battle - is Trump.
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