Feds Try To Prevent AT&T, Time Warner Hookup As Trial Begins

The U.S. Justice Department and attorneys for AT&T and Time Warner presented two starkly different versions of what consumers will experience should the media and advertising behemoths be allowed to merge as opening arguments were heard yesterday in an antitrust trial before Judge Richard Leon of the U.S. District Court for the District of Columbia.

“People lined up in snow-covered D.C. early Thursday morning for a chance to witness the start of the proceedings. The crowd filled two courtrooms and included the companies’ chief executives, AT&T’s Randall Stephenson and Time Warner’s Jeff Bewkes, as well as U.S. antitrust chief Makan Delrahim,” Brent Kendall and Drew FitzGerald observe for the Wall Street Journal.

“Before a packed courtroom …, the two sides zeroed in on the case’s central question: Whether the deal would force consumers to pay more to watch their favorite shows on Time Warner cable channels like CNN and TNT,” writes Cecilia Kang for the New York Times. “‘If the merger goes forward, consumers all across America will be worse off as a result,’ said Craig Conrath, the Justice Department’s lead lawyer.



“‘The government’s theory is fundamentally stuck in the past,’ said 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. ‘It would be financially ruinous if Turner were not as widely distributed as possible,” Mr. Petrocelli said,’” Kang continues.

For his part, “Leon said little while the government and the companies spent about 90 minutes of opening arguments attacking the opposing side’s legal position,” Kendall and Fitzgerald report. But he’ll have an estimated six to eight weeks to weigh in, as he is wont to do, before rendering his verdict. 

Why do the deal in the first place, besides to increase shareholder value?

“For AT&T CEO Randall Stephenson, buying Time Warner is a way to set the company apart from its key rival, Verizon, which has done its own content deals by acquiring both AOL and Yahoo. Pricing wars have pushed down monthly cellphone bills, which has been good for consumers but not so great for mobile phone operators,” points out Recode’s Edmund Lee.

“AT&T’s key thesis in buying Time Warner is that the combined company could speed up the development of new types of online video (which it would own), and drive bigger profits by marrying AT&T’s consumer data with Time Warner’s TV content to sell targeted advertising, which is worth more than the usual advertising.”

Other observers see other things going on here, however, as is sometimes the case in proceedings that affect so many.

“The Watchdog’s chief issue with AT&T has been, is, and probably always will be the frustrating, annoying, make-you-scream customer service culture of the company I call #shameATT,” writes “Watchdog” columnist Dave Lieber for the Dallas Morning News. “Customer service is not part of the trial. So let's have our own. If you're reading this, you're the judge in my kangaroo court.”

Let’s just say that the six short cases Lieber presents paint a more graphic picture than the corporate spokesman’s response to them that includes lines such as: “We have also simplified our customer experience, as evidenced by an almost 20% reduction in customer calls and about a 10% reduction in complaints.”

It used to be so simple, back in the Ma Bell days, before the government broke up the AT&T monopoly in 1984.

There is, as seems to be the case with just about everything nowadays, a tinge of partisan politics in the current proceedings.

“President Trump has been very public about his dislike of CNN, which is owned by Time Warner. He's complained about this deal going far back as 2016 — right? — when he was on the campaign trail. Could any of those comments play a role in the trial?” NPR’s “All Things Considered” host Audie Cornish asked correspondent David Folkenflik yesterday.

“Well, lawyers for AT&T sure wanted it to do so. They had tried to effectively subpoena emails between White House officials and Justice Department officials to see if what, if any, role the president's own statements and political leanings on this issue had played in influencing Justice officials to file this civil lawsuit in federal court down there in D.C. The judge in this case said, you know what? We're going to decide this case on its own merits,” Folkenflik replied.

And Leon may be just the judge to see that it is, if John Cassidy’s 2013 piece for The New Yorker be our North Star.

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