Behind the Dispute Over AT&T-Time Warner Deal

AT&T is vowing to fight the U.S. government to save its $85 billion bid for Time Warner, after the Justice Department sued to block the deal on grounds it could hike television bills and hamper innovation.

The government’s objections have raised red flags for those who worry that the White House is using the merger-review process to try to hurt Time Warner-owned CNN, with which President Donald Trump has tangled frequently.

Here’s a look at what’s behind the deal:

Why Does AT&T Want To Buy Time Warner?

As U.S. wireless growth slows down, AT&T has been looking for ways to marry its nationwide wireless business with video, which Americans increasingly watch on the internet.

AT&T bought satellite TV company DirecTV in 2015. Buying Time Warner would give AT&T more video through such cable networks as HBO, CNN and TBS and the Warner Bros. movie studio. AT&T can deliver this video over the internet, including its cellular network.

AT&T also hopes to use Time Warner content to support an advertising business that could stand up to Google and Facebook, which dominate the digital-ad industry and are increasingly interested in video themselves. AT&T also could use Time Warner’s video to support its wireless business. AT&T already discounts its streaming service, DirecTV Now, and even HBO, which it doesn’t own yet, to lure customers to its unlimited phone data plans.

What Will It Mean for Rivals and Consumers?

AT&T says it will be able to package and deliver video more cheaply, over the internet, rather than in expensive cable bundles.

But the government worries that AT&T would be able to charge rival distributors such as cable companies “hundreds of millions of dollars more per year” for Time Warner’s programming — payments that would ultimately get passed down to consumers through their cable bills. And the Justice Department’s antitrust chief, Makan Delrahim, warns…