DOJ vs. AT&T

The Justice Department and AT&T Inc. traded legal jabs Thursday as a federal judge opened proceedings on whether the telecom giant’s planned purchase of Time Warner Inc. violates antitrust laws. U.S. District Judge Richard Leon said little while the government and the companies spent about 90 minutes of opening arguments attacking the opposing side’s legal position. 

The Justice Department, which is seeking to block the $85 billion deal, said the merger could mean at least $400 million in pay-tv price increases because AT&T, which owns the DirecTV satellite service, would have newfound marketplace leverage if it folds in Time Warner’s stable of programming, including the Turner networks and HBO.

“Time Warner would be a weapon for AT&T because AT&T’s competitors need Time Warner,” Conrath said, according to Reuters. 

The lawyer defending AT&T and Time Warner in the lawsuit, Daniel Petrocelli, called the government’s claims “preposterous.” He said the Justice Department’s thinking on competition was “fundamentally stuck in the past” and that its arguments were “divorced from reality,” according to a report from Reuters. 

He also sought to poke holes in the government’s economic analysis and said the deal would actually lead to a 50-cent decrease in prices for pay TV subscribers. “It is a case where there is only one just, clear-cut outcome,” Petrocelli said, according to the Journal.

The attacks came on the first official day of one of the most closely watched U.S. antitrust trials in years. The fate of the deal could have ripple effects on future agreements between internet service providers and media companies, as well as affect what streaming services look like in the future. Antitrust experts say a win for the government could have a chilling effect on other so-called “vertical mergers,” in which the companies merging doesn’t directly compete against each other, but combined could exert market power over competitors.

 

Keep those stops tight

Todd “Bubba” Horwitz