Tag Archives: Merger
WASHINGTON (Reuters) – President Donald Trump’s administration urged a federal judge on Thursday to block AT&T Inc’s proposed $ 85 billion merger with Time Warner Inc, saying the deal would hand the company a “weapon” to harm competition and raise consumer prices.
During opening statements in one of the most closely watched U.S. antitrust trials in years, Justice Department lawyer Craig Conrath said the deal would hike prices by more than $ 400 million annually, or an average of $ 0.45 a month for pay TV subscribers.
Conrath said AT&T would be able to use content from movie and TV show maker Time Warner including its Turner unit to prevent innovation. The merger will hurt 90 million U.S. pay TV subscribers, Conrath added.
“This is a weapon to harm competition,” Conrath told U.S. District Judge Richard Leon, who will decide the case.
The Justice Department filed suit in November to stop AT&T, which has some 25 million pay-TV subscribers, from closing the deal. AT&T says a merger would benefit consumers by creating efficiencies. AT&T is the biggest pay-TV provider via subsidiary DirecTV.
Opening statements were delayed one day by bad weather in Washington.
Conrath suggested that AT&T would be able to hike fees that Turner charges for its content by about 10 percent if the merger were approved and that the company could withhold content from rival distributors. He referenced an internal email from Turner executives that Dish Network Corp’s Sling service would be “crap” without Turner content, as he paraphrased the stronger language in the email.
Trump publicly criticized the deal as a candidate and as president, and the Republican president often has excoriated Time Warner’s CNN news network.
If the administration loses, that could open up the field for similar tie-ups between distributors and content providers. But a win could strengthen the hand of antitrust regulators looking at other, similarly structured mergers.
AT&T and Time Warner are not direct competitors, making the deal a so-called vertical merger between companies on the same supply chain. The vast majority of challenged mergers involve one rival buying another.
The merger would hand AT&T, if it becomes the new owner of Time Warner, the motive and opportunity to refuse to license March Madness NCAA basketball tournament games, along with premium cable channel HBO and other content, to pay-TV rivals and online distributors, the Justice Department has said.
AT&T lawyer Daniel Petrocelli had asked for access to communications between the White House and Justice Department about the deal, but the judge denied the request.
If the government loses, Verizon Communications Inc and Charter Communications Inc could strike deals to buy movie or television makers and squeeze smaller pay-TV providers.
AT&T has said the merger would result in more than $ 2.5 billion in annual cost savings by 2020. It argues that the deal is crucial to compete with companies like Facebook Inc, Alphabet Inc, Amazon.com Inc and Netflix Inc.
The internet companies pose two challenges to pay TV. They either compete with cable and satellite television for ad dollars or provide cheaper online video that has hurt pricey pay-TV. Some do both.
Reporting by Diane Bartz and David Shepardson in Washington; Editing by Will Dunham
AT&T and Time Warner argued on Tuesday that their proposed $ 85.4 billion merger was “pro-competitive” and “pro-consumer,” as they sought to refute U.S. Justice Department allegations that the deal breaks antitrust law.
In a joint court filing, the companies focused on rebutting government efforts to show that AT&T, which owns pay-TV provider DirecTV, would raise rates for rival pay-TV companies to use Time Warner’s movies and TV shows.
They also argued that the government was wrong to worry that the deal would hamper the development of online video.
They did not mention President Donald Trump or the White House. Trump has repeatedly criticized Time Warner’s CNN news unit and announced his opposition to the deal before last year’s presidential election, saying it would concentrate too much power in AT&T’s hands.
Democratic Sen. Richard Blumenthal, who is skeptical of the deal, said last week he was nonetheless worried that the antitrust issue was being used for political reasons. Other lawmakers have expressed similar concerns.
The Justice Department last week sued AT&T to block its planned acquisition of Time Warner.
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In the filing on Tuesday, the companies said that they operate in highly competitive markets which will remain competitive after they close the deal.
They noted that streaming service Netflix has 100 million subscribers globally, while tech firms Apple, Google and Facebook were investing billions of dollars in video. Hulu and Amazon were becoming contenders in video distribution, while others, like social messaging company Snapchat, were starting to enter the market, they added.
“Against this backdrop, the proposed merger of AT&T and Time Warner is a pro-competitive, pro-consumer response to an intensely competitive and rapidly changing video marketplace,” the companies said in the filing.
“This transaction presents absolutely no risk of harm to competition or consumers.”
The trial will be heard by Judge Richard Leon at the U.S. District Court for the District of Columbia.
Leon was nominated to the court by former Republican President George W. Bush and is no stranger to high-profile cases. Leon signed off on the Justice Department’s 2011 deal which allowed Comcast to buy NBC Universal and has heard a number of private antitrust cases. In the 1990s, he worked on House of Representatives panels looking at the Iran-Contra affair and the Whitewater controversy.
Termination date for the deal is April 22, 2018.
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