AT&T, DOJ make opening arguments in merger trial

The government and AT&T delivered their opening arguments Thursday in the trial over the telecom giant’s proposed $85 billion merger with Time Warner.

Justice Department attorney Craig Conrath focused on the “ability and incentive” AT&T would have to use popular Time Warner programming — which includes HBO shows, March Madness, NBA games and more — to hurt competition. And he warned that consumers could end up paying more for television subscriptions.

“Effectively, consumers will be forced to pay for an extra month of Time Warner content every year even though they’re only getting 12 months,” Conrath argued.

{mosads}

The prosecutor described how the merger risked giving AT&T outsized leverage when negotiating prices for Time Warner’s entertainment content to be distributed by AT&T competitors.

Those competitors increasingly include internet companies offering their own streaming services.

Conrath said AT&T, the largest paid television provider in the country, could block Time Warner content from new and innovative startups, handicapping potential rivals.

“AT&T has an incentive to slow down these new online competitors in order to protect their pay TV cash cow,” Conrath said.

But Daniel Petrocelli, the lead attorney for the merging companies, dismissed that argument as “preposterous,” saying that AT&T’s business relies on finding innovative ways to distribute content to consumers.

“We’re not trying to suppress or impede this transformation,” Petrocelli said.

He also rejected the idea that AT&T wants to buy Time Warner to withhold its content from competitors. Petrocelli said that it would be “financially ruinous” if the company’s programming was not as widely available as possible.

Petrocelli also attacked the economic model that the government will present. That model claims that the merger will lead to a net price increase of $400 million a year for television subscribers. He said the model relied on faulty information, including a consumer survey funded by an AT&T competitor.

“There is absolutely no basis for this hypothetical model that you will hear in this trial,” Petrocelli said.

The two sides made their opening cases Thursday before a packed courtroom that included AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes.

The case is widely seen as the antitrust “trial of the century” and has been mired in controversy. Supporters of the merger question if President Trump improperly interfered in the decision to punish CNN, a Time Warner subsidiary. Trump has feuded with the network, accusing it of biased coverage.

AT&T itself has tried to fuel that speculation, but during Thursday’s arguments the company’s attorneys did not bring up the president or any suggestions that the decision to block the merger was politically motivated. The White House and the Justice Department have both denied that there was any improper interference in the case.

This story was updated at 3:09 p.m.