During a news conference after the U.S. Department of Justice filed suit to block AT&T’s acquisition of Time Warner, company CEO Randall Stephenson sought to address the “elephant in the room”: the notion that President Donald Trump’s rancor at CNN had threatened the deal.
“Frankly, I don’t know” if the reports are true, he said. “But nobody should be surprised that it keeps coming up.” As to any potential settlement that lets AT&T keep CNN but implements any controls on the news network, he said, “Any agreement that results in us losing control [of CNN], either directly or indirectly is a non-starter.”
Appearing alongside lead outside attorney Daniel Petrocelli and AT&T general counsel David McAtee, Stephenson predicted a speedy resolution to the case and repeatedly expressed confidence that the $85 billion merger would close. Petrocelli said the company would be ready to begin a trial in as few as 60 days and predicted it would not “last months and months and months.”
In its lawsuit, filed late this afternoon, the DOJ’s antitrust division cited AT&T and DirecTV documents to make the argument that a combined company could “operate (its) pay-TV business as a ‘cash cow’ while slowly pivoting to new models.”
Stephenson retorted that such a contention “defies logic,” noting that internet-delivered pay-TV service DirecTV Now, which features packages as cheap as $35 a month, launched one year after the DirecTV deal closed. “As you innovate and you broaden distribution, price points come down,” he said. Traditional players, he added, are competing against Facebook, Amazon, Netflix and Google, which reach billions of customers at much lower price points and with greater technological might than the TV establishment.
Petrocelli emphasized numerous times that the government, not AT&T, faced the burden of proof in the case and must show consumer harm, something that has not happened in a federal antitrust case since the 1970s. “It’s a burden they have not met in half a century and a burden they will not meet here,” he said. Under a combined company, “the TV bill will not go up.”
Asked directly whether the company would seek proof of communication between the DOJ and the White House, Petrocelli declined to specify a strategy. “These things tend to come out,” he said, and in this case “it wouldn’t be good for the government’s case.”
McAtee said the DOJ argument that AT&T itself had filed briefs opposing Comcast’s acquisition of NBCUniversal relies on “quotes taken completely out of context.” In that case, which unfolded in a media environment circa 2010 that is “wildly different” from the present one, he said NBC’s ownership of a broadcast network, regional sports networks and local stations gave that transaction a different profile than the AT&T deal.
Stephenson reflected on the strange turn the case took, though he declined to answer a direct question about why the government’s tone changed some 13 months after the deal was first announced. “I’ve done a lot of deals in my career but I’ve never done one where I’ve disagreed with the Justice Department on so many basic facts,” he said. The implications of the case, he maintained, are vast. “This lawsuit has the whole world questioning what it can and cannot do,” he said. “It can have nothing but a freezing effect on commerce in general.”