AT&T Says Merger Will Boost Mobile Video, Create Targeting Opportunities

AT&T plans to defend its proposed merger with Time Warner by arguing that the deal will enable it to better compete with Netflix, Amazon, Google and other companies that offer online video.

"In only a few years, this phenomenon of 'over the top' premium video has irreversibly reshaped the landscape for the creation and delivery of television content, pushing all players in the market to respond in numerous ways that benefit consumers. This merger is one of those responses," AT&T writes in court papers filed in advance of its upcoming court battle with the Department of Justice.

Last November, the DOJ sued to block the proposed $85 billion merger, alleging that the deal will decrease competition, result in higher prices for consumers and hinder online competitors.

AT&T and the DOJ set out their positions in pre-trial briefs submitted late last week to U.S. District Court Judge Richard Leon in Washington, D.C. Among other arguments, AT&T contends that the deal will enable it to promote online video by offering Time Warner's content.

"AT&T is merging with Time Warner not to thwart online viewing, but to advance it, by enabling AT&T to introduce new video products better suited to mobile viewing," the company writes.

AT&T adds that it hasn't previously been able to obtain the distribution rights that would allow it "to achieve its vision for the next wave of products and packages, including lower-cost, ad-supported services."

The company also says it plans to combine its data with Time Warner's ad inventory to build "an industry-wide, fully-automated advertising platform directly opposite Google and Facebook."

AT&T adds that Time Warner currently lacks detailed information about the people who watch its TV programs.

"Unlike Google and Facebook, Time Warner has no access to meaningful data about its customers and their needs, interests, and preferences," AT&T writes. "In most cases, Time Warner does not even know its viewers’ names. This data gap impedes its ability to compete with Google, Facebook, and other digital companies in advertising sales, which are critical to Turner’s viability, and which allow Turner to keep subscription fees much lower than they otherwise would be."

The telecom also argues that Time Warner is at a disadvantage compared to Amazon, Netflix, and Comcast/NBCU. "Because of their direct customer relationships, these firms can use data about viewers’ preferences to optimize their decisions about what programming to develop, when to schedule it, and how to market it," AT&T writes.

The DOJ counters in its pre-trial papers that the merger "would give AT&T a new tool to slow down the development and growth of disruptive online competitors in the future."

The government adds: "The decision in this case will chart the course for the future of video-content delivery in the United States -- either important video content will be available through a competitive market to all distributors, including up-and-coming innovators, or it will likely only be available through vertically integrated, well-funded silos."

The lawsuit is slated to go to trial March 19.

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