AT&T Would Use Time Warner as a ‘Weapon,’ Justice Dept. Says

“The government’s theory is fundamentally stuck in the past,” stated Daniel Petrocelli, the lead lawyer for AT&T and Time Warner. He said the merger would do the opposite of what the government asserts: The company would have no incentive to withhold Turner channels, which are owned by Time Warner.

Image Mr. Stephenson leaving the federal court house on Thursday. The Justice Department argues that AT&T would charge its rivals more cash for Time Warner content if the merger were approved.Credit Jose Luis Magana/Associated Press”It would be economically crippling if Turner were not as extensively distributed as possible,”Mr. Petrocelli said.The opening statements previewed the fierce legal battle that will play out before Judge Richard Leon of the United States District Court for the District of Columbia. His choice in the case will help set the direction for antitrust law for several years to come. It will also frame the shape of the media industry, which is dealing with major shifts as more people move from cable tv to viewing streaming entertainment over the internet.Hundreds of business officials, press reporters, hedge fund investors, antitrust scholars and industry analysts stood in line for hours to obtain a seat at the trial. Randall Stephenson, AT&T’s primary executive, and Jeffrey Bewkes, Time Warner’s chief executive, sat together during the 90 minutes

of opening remarks. Makan Delrahim, the Justice Department’s leading antitrust authorities, seen from the front row on the other side of the space. The primary executives and Mr. Delrahim did not interact.The case has drawn uncommon public attention partly because of concerns about whether it had a tinge of political interference. The Justice Department’s opposition came as a surprise when it was revealed in November, and AT&T suggested it had actually been prompted by President Trump, who has stated that he opposed the offer. The government said that Mr.

Trump did not interact with antitrust authorities on the offer and that their decision to oppose the merger had not been bought by the White House.Judge Leon has actually declined a lot of AT&T’s efforts to introduce proof about political interference into the case. Rather, the trial, which is anticipated to last 6 to eight weeks, will mainly concentrate on basic principles of antitrust law: whether the merger would cause costs to increase and competition to decrease.The court’s decision will determine exactly what sort of media mergers will be allowed in between the developers and

the suppliers of content. Such offers, called”vertical mergers,”generally pass regulative analysis due to the fact that they don’t make a business dominant in one particular market location. Judge Leon has actually noted the uncommon case resembles a” rare horse” however not a”unicorn.” Blair Levin, an expert for New Street Research, a firm concentrated on the telecommunications market, wrote in a research study note that a Justice Department triumph would “set a requirement for what makes up substantial harm that would call into question a variety of other potential and pending mergers.” About 60 witnesses are anticipated to take the stand during the trial, including Mr. Stephenson of AT&T and Mr. Bewkes of Time Warner, and executives from digital services like SlingTV and YouTube.The Justice Department said it would present internal files from Time Warner and AT&T to reveal that the merged company would have the incentive to raise costs on competitors and customers. In one email Mr. Conrath discussed on Thursday, a Turner executive described how Dish TV, AT&T’s top rival in satellite TV service, would be deteriorated without his company’s channels.”Time Warner,”

Mr. Conrath said,”would be a weapon for AT&T due to the fact that AT&T’s rivals need Time Warner programming.”The government stated customers would have to pay an extra$436 million a year since of the deal.Mr. Petrocelli foreshadowed

a strategy to assault that financial analysis. He said the Justice Department’s computations, made by the antitrust economist Carl Shapiro, had actually omitted crucial information and were therefore flawed.Mr. Petrocelli guaranteed to show Judge Leon that cable television customers could wind up paying about 50 cents less a month if the deal goes through.”This is what I call the federal government’s shrinking

case,” he said.A variation of this post appears in print on March 23, 2018, on Page B1&of the New York edition with the headline: AT&T Antitrust Trial Offers Dueling Views of TELEVISION’s Future. Continue checking out the primary story