AT&T Rebuts Government Claim That Time Warner Deal Will Boost Customers’ Pay-TV Bill By 45 Cents A Month

In the latest salvos in AT&T’s legal battle against the government, which goes to trial on Monday, the parties squabbled over the Department of Justice’s claim that the acquisition of Time Warner will boost the price consumers pay for TV service.

In a sealed motion, the DOJ said the telecom giant’s $85 billion deal will result in a 45-cent monthly rate increase due to AT&T’s strong distribution pipeline, especially top satellite pay-TV provider DirecTV. It also says AT&T’s self-imposed “arbitration/no-blackout” policy, adopted last November in an effort to counter any perception of potential self-dealing, should be considered invalid.

In a 14-page response, AT&T calls the government’s motion “baseless” and says its duty as a programmer will be to reach fair deals with all distributors, not just its own.

“Apart from the remarkably small size of the alleged increase, there are several independent reasons why the evidence cannot support the government’s claim,” the company said. The focus of the filing is just one of those reasons: the company’s stated obligation to continue to distribute Turner networks without any drops in service. (The DOJ has insisted that once the assets of Turner are aligned with a major distributor like AT&T’s DirecTV, the company could manipulate distribution deals and end up extracting higher carriage fees, in turn leading to higher consumer rates.)

The government filed suit last November to block the deal, saying the combination of Time Warner content and AT&T distribution would harm both competitors and customers. President Donald Trump has echoed these concerns, even as he has advocated a host of de-regulatory and pro-business initiatives that have helped AT&T and many other companies.

AT&T insists in the brief that the obligations of existing and future distribution agreements would supersede any self-interest given that managing broad-audience networks requires negotiating with a range of distributors, not just the in-house ones. “It is indisputable that legally binding commitments that affect the commercial realities of a post-merger market are relevant to whether a merger will ‘substantially lessen’ competition,” the brief said.

U.S. District Court Judge Richard Leon has scheduled a pre-trial conference this afternoon. The two sides are finalizing their witness lists, one factor that will shape the trial, which is expected to last about three weeks.

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