AT&T-Time Warner Case: How the Biggest Antitrust Trial in Years Could Play Out

March 21, 2018 in News by RBN Staff


Source: NY Times | By 

The chief executives of AT&T and Time Warner, Randall Stephenson, left, and Jeffrey Bewkes, testified to a Senate subcommittee in 2016 about the proposed merger of their companies. CreditEvan Vucci/Associated Press

WASHINGTON — The Justice Department’s case to block AT&T and Time Warner’s $85 billion blockbuster merger heads to trial this week, with opening statements expected on Thursday. The case is being billed as one of the most important antitrust trials in years.

The deal, if approved, would create a media giant that combines AT&T’s nationwide mobile and satellite distribution networks with Time Warner’s huge collection of popular movies and television offerings, including “Game of Thrones” on HBO, news on CNN, and college and professional basketball on TNT. The central question of the trial: Would that combination hurt consumers or help them?

Here’s what you need to know.

When does it start, how long will it go and when will there be a decision?

Opening statements are scheduled for Thursday, with the Justice Department and AT&T getting 45 minutes each to lay out their main arguments. Expect lots of colorful claims and defenses from both sides. Top officials from the Justice Department, including the head of its antitrust division, Makan Delrahim, are expected to show up in United States District Court in Washington to watch. AT&T’s chief executive, Randall Stephenson, and Time Warner’s chief executive, Jeff Bewkes, will be there, too — as will scores of other media, telecom and tech executives, as the outcome of the trial could reshape the media industry.

Read more on what the trial could mean for the future of TV.

The trial is expected to last six to eight weeks — unless there is a settlement — with each side calling about 30 witnesses and presenting reams of evidence. The Justice Department alone plans to show 519 exhibits. It could take many weeks longer for Judge Richard J. Leon to make a decision on the $85 billion merger.

What are the main arguments of both sides?

The Justice Department sued to block the merger because it believes the combination of AT&T with Time Warner would hurt competition and lead to higher prices for consumers.

AT&T and Time Warner argue that the opposite will happen. With their combination, they say, they will be a stronger competitor to the giants of Silicon Valley, such as Facebook, Amazon, Apple and Google, which are spending billions of dollars on video that they can then distribute on their services.

Who are the key figures during the trial?

Judge Leon has experience in antitrust disputes, giving final approval of Comcast’s merger with NBCUniversal in 2011 — a case that many have looked to for precedent.

The Justice Department’s legal team is led by Craig Conrath, a longtime government litigator who has argued for government antitrust actions throughout several administrations.

AT&T and Time Warner’s defense team is led by Daniel Petrocelli, a Los Angeles litigator who doesn’t have experience in antitrust law. He gained fame for his successful case against O. J. Simpson in a wrongful-death suit brought by the family of Ron Goldman.

Who else will be there?

The most interesting testimony will probably come from company executives. Mr. Stephenson and Mr. Bewkes are expected to take the stand. Ahead of the opening statements, Judge Leon said he also wanted to question third parties including Google. Last fall, Google argued in a deposition that shows made by Turner, which is owned by Time Warner, were important to its YouTube service.

Turner, which owns CNN, TBS and TNT, is a key focus of the Justice Department’s case. The department says that those channels are “must watch” television that is valuable to the health of rivals like Dish and Google, and that combining them with AT&T’s wireless and satellite services would encourage the new company to withhold those shows or make them much more expensive.

What will be the impact of the court’s decision?

If Judge Leon sides with the Justice Department, it will be much harder for telecom, tech and media firms to strike deals with each other. Blocking the so-called vertical merger of two companies that don’t directly compete with each other would set a higher bar for other deals.

If AT&T and Time Warner win, expect further consolidation in the industry. Several deals are already in the works or being discussed, pending a sign from the court on whether they can proceed.