AT&T Boss Defends Time Warner Against “Absurd” Government Claims

AT&T CEO Randall Stephenson took the witness stand this afternoon, appearing in a Washington federal court as the final defense witness in the five-week antitrust trial over the mobile giant’s pending merger with Time Warner.
Ridiculing the D…

AT&T CEO Randall Stephenson took the witness stand this afternoon, appearing in a Washington federal court as the final defense witness in the five-week antitrust trial over the mobile giant’s pending merger with Time Warner. Ridiculing the Department of Justice complaints as “absurd,” the bespectacled 58-year-old architect of the deal defended it as a necessary measure by two traditional companies facing unprecedented competition from tech rivals. By joining forces, he…

AT&T Exec John Stankey Testifies “Battle” For Viewer Attention Sparked Time Warner Bid

After sitting in Courtroom 18 of the U.S. District Court in Washington for the past month, AT&T exec John Stankey finally had his chance to testify late today about the motivation behind the companies’ $85 billion merger.
“The market we are competing in is for time and attention,” he said under direct questioning from lead defense attorney Daniel Petrocelli. “Facebook, Google, Netflix — they are all distracting people from other things they used to do” like tune in linear…

After sitting in Courtroom 18 of the U.S. District Court in Washington for the past month, AT&T exec John Stankey finally had his chance to testify late today about the motivation behind the companies’ $85 billion merger. “The market we are competing in is for time and attention,” he said under direct questioning from lead defense attorney Daniel Petrocelli. “Facebook, Google, Netflix — they are all distracting people from other things they used to do” like tune in linear…

Jeff Bewkes Says DOJ’s Key Antitrust Argument Against AT&T-Time Warner Merger Is ‘Ridiculous’

Time Warner CEO Jeff Bewkes testified on Wednesday in DC District Court, saying the Department of Justice’s assertion that a merger with AT&T would allow the mega-company to blackout pay-TV operators as a negotiating ploy is “ridiculous.”

“If our channels are not in distribution we lose lots of money (from subscriptions and advertising),” he said while defending the potential $85.4 billion merger against the government’s antitrust arguments, according to a Reuters report.

The DOJ had previously warned District Judge Richard Leon — the sole decider in whether the deal goes through — that a combined AT&T-Time Warner would allow the company to raise licensing fees and blackout pay-TV operators in the midst of negotiations.

Bewkes believes that makes no sense.

Also Read: Who Is Winning in DOJ’s Case Against AT&T-Time Warner?

The Time Warner CEO offered up as evidence that less than 2 percent of subscribers jump ship in the event of a blackout, something that is not uncommon during carriage fee negotiations. Blackouts in pay-TV happen occasionally when operators and distributors can’t agree to terms.

Last week, economists for both sides argued over one of the lynchpins in the DOJ’s case against AT&T-Time Warner, which is an arbitration provision the companies agreed to.

The arbitration provision essentially says that AT&T won’t black out Time Warner channels during negotiations with carriers, and it requires the combined company to enlist an arbiter to use fair market value to determine prices for things like licensing fees.

So yeah, this blackout thing is a big issue.

Also Read: Here’s Everything You Need to Know About the U.S. Gov’s Lawsuit to Kill the AT&T-Time Warner Merger

But it’s not the only one — and Time Warner isn’t exactly without concern for the future itself.

The pending merger is in Time Warner’s best interest, Bewkes said today in court, and a way for the company to combat the impact it feels from the likes of Google, Facebook and other Internet companies.

Bewkes explained that Time Warner has been at a disadvantage in innovating and advertising because of the lack of granular information about the viewers that pay-TV and Internet companies have. You know, like the Facebook data news you simply cannot avoid these days.

The government has rested its case, but AT&T-Time Warner still have plenty left to say. The trial goes on.

Related stories from TheWrap:

Court Rejects AT&T’s Request to See White House Emails on Time Warner Acquisition

Turner CEO John Martin ‘Hopeful’ Time Warner-AT&T Merger Will Go Through

Will Disney-Fox Deal Face Antitrust Challenge From Trump Administration Like AT&T-Time Warner?

Time Warner CEO Jeff Bewkes testified on Wednesday in DC District Court, saying the Department of Justice’s assertion that a merger with AT&T would allow the mega-company to blackout pay-TV operators as a negotiating ploy is “ridiculous.”

“If our channels are not in distribution we lose lots of money (from subscriptions and advertising),” he said while defending the potential $85.4 billion merger against the government’s antitrust arguments, according to a Reuters report.

The DOJ had previously warned District Judge Richard Leon — the sole decider in whether the deal goes through — that a combined AT&T-Time Warner would allow the company to raise licensing fees and blackout pay-TV operators in the midst of negotiations.

Bewkes believes that makes no sense.

The Time Warner CEO offered up as evidence that less than 2 percent of subscribers jump ship in the event of a blackout, something that is not uncommon during carriage fee negotiations. Blackouts in pay-TV happen occasionally when operators and distributors can’t agree to terms.

Last week, economists for both sides argued over one of the lynchpins in the DOJ’s case against AT&T-Time Warner, which is an arbitration provision the companies agreed to.

The arbitration provision essentially says that AT&T won’t black out Time Warner channels during negotiations with carriers, and it requires the combined company to enlist an arbiter to use fair market value to determine prices for things like licensing fees.

So yeah, this blackout thing is a big issue.

But it’s not the only one — and Time Warner isn’t exactly without concern for the future itself.

The pending merger is in Time Warner’s best interest, Bewkes said today in court, and a way for the company to combat the impact it feels from the likes of Google, Facebook and other Internet companies.

Bewkes explained that Time Warner has been at a disadvantage in innovating and advertising because of the lack of granular information about the viewers that pay-TV and Internet companies have. You know, like the Facebook data news you simply cannot avoid these days.

The government has rested its case, but AT&T-Time Warner still have plenty left to say. The trial goes on.

Related stories from TheWrap:

Court Rejects AT&T's Request to See White House Emails on Time Warner Acquisition

Turner CEO John Martin 'Hopeful' Time Warner-AT&T Merger Will Go Through

Will Disney-Fox Deal Face Antitrust Challenge From Trump Administration Like AT&T-Time Warner?

Time Warner Boss Jeff Bewkes Pushes Back At What DOJ Is “Missing”

Under cross-examination by a Department of Justice attorney, Time Warner CEO Jeff Bewkes hit back at repeated suggestions that the company has been growing its TV ad revenues even before pursuing the AT&T merger.
“What you’re missing is that the competition for advertising isn’t just about television,” he told DOJ attorney Claude Scott during his third hour of this afternoon. “If digital advertisers are able to target consumers with messages delivered through search or…

Under cross-examination by a Department of Justice attorney, Time Warner CEO Jeff Bewkes hit back at repeated suggestions that the company has been growing its TV ad revenues even before pursuing the AT&T merger. “What you’re missing is that the competition for advertising isn’t just about television,” he told DOJ attorney Claude Scott during his third hour of this afternoon. “If digital advertisers are able to target consumers with messages delivered through search or…

Who Is Winning in DoJ’s Case Against AT&T-Time Warner? It Depends Who You Ask

The U.S. Department of Justice is still building its case against AT&T’s $85.4 billion acquisition of Time Warner, but some analysts believe the mega-merger will go through anyway.

In a lawsuit attempting to block the AT&T-Time Warner deal, the DoJ has argued the vertical merger would be detrimental to consumers. The government says a combined AT&T-Time Warner could use its newfound leverage to raise licensing fees, charging more for its channels, which would in turn raise costs for viewers.

But BTIG analyst Rich Greenfield doesn’t think the DoJ has done enough at this point to back up that claim.

“The government has so far failed to show that vertical integration, even with must-have content, has historically led to higher prices for programming,” Greenfield wrote in a note to investors. “While predicting the outcome of a complex trial, particularly with a judge who has limited anti-trust case history, is challenging at-best, so far it appears the government has struggled to prove its theories of harm.”

Also Read: Would Shari Redstone Really Replace CBS Chief Les Moonves With Bob Bakish?

Greenfield is not alone in his optimism for a go-ahead outcome. Before the trial started, CNBC “Mad Money” host Jim Cramer opined AT&T would likely win the case and that its stock was a “Buy.”

However, the market itself doesn’t seem as confident as Cramer does. Shares of AT&T are down about 5 percent from the stock’s closing price the trading day before its trial began on March 19. As for Time Warner, well, its stock is up all of 6 cents since just before the opening gavel.

Here are snapshots of the past month of trading for both public companies:

Also Read: Disney Must Make Offer to Buy All of Sky If Fox’s Own Deal Falls Through

Meanwhile, John Bergmayer, senior counsel for telecommunications and internet law public interest advocacy group Public Knowledge, argues that the DoJ has actually made a pretty strong case.

“They have presented good evidence that there has been a violation of the Clayton Act,” Bergmayer told TheWrap, referring to the 1914 antitrust amendment that focuses on price discrimination, price fixing and unfair business practices.

“And I think [the DoJ’s star witness, economist and Berkeley professor] Carl Shapiro presented a strong case and held up to some tough questioning.”

On Wednesday, Shapiro testified that if the proposed combination of AT&T-Time Warner is approved, consumers could be paying an extra $571 million annually by 2021. AT&T-Time Warner’s witness disagreed but, Bergmayer told TheWrap, “AT&T’s counter-evidence, by contrast, isn’t persuasive, and it often just promises that the company wouldn’t do the things it has every economic incentive to do.”

Also Read: Here’s Everything You Need to Know About the U.S. Gov’s Lawsuit to Kill the AT&T-Time Warner Merger

Right now both sides appear to be hitting the notes they need to hit, according to Georgetown economics and law professor Steven Salop.

“It’s very hard to know who’s winning. It’s not like a football game,” Salop told TheWrap. “A lot is going to rest on how the judge interprets and uses in his analysis the AT&T-Time Warner arbitration provision.”

The arbitration provision essentially says that AT&T won’t black out Time Warner channels during negotiations with carriers, and it requires the combined company to enlist an arbiter to use fair market value to determine prices for things like licensing fees.

But in an article cowritten with Public Knowledge CEO Gene Kimmelman this month, Salop said he doesn’t think the arbitration is enough. Among the many issues Salop and Kimmelman identify is that the agreement doesn’t include HBO, nor does it include any new Time Warner networks.

Also Read: Court Rejects AT&T’s Request to See White House Emails on Time Warner Acquisition

At this point, how the trial shakes out all comes down to Richard Leon of the United States District Court for the District of Columbia, a judge who is not an antitrust expert. In other words, your guess is as good as ours (or Greenfield’s, or Cramer’s, or Shapiro’s, or Bergmayer’s, or Salop’s, or…)

AT&T and Time Warner did not respond to TheWrap’s requests for comment on this story. A rep for the U.S. Department of Justice did respond, though just to say, “Per Judge Leon’s instructions to the parties, we aren’t commenting on the case.”

Related stories from TheWrap:

Court Rejects AT&T’s Request to See White House Emails on Time Warner Acquisition

Time Warner Q4 Earnings Up as HBO Caps Year of Record Subscriber Growth

AT&T Tops Q4 Earnings Forecast as Time Warner Acquisition Must Wait

The U.S. Department of Justice is still building its case against AT&T’s $85.4 billion acquisition of Time Warner, but some analysts believe the mega-merger will go through anyway.

In a lawsuit attempting to block the AT&T-Time Warner deal, the DoJ has argued the vertical merger would be detrimental to consumers. The government says a combined AT&T-Time Warner could use its newfound leverage to raise licensing fees, charging more for its channels, which would in turn raise costs for viewers.

But BTIG analyst Rich Greenfield doesn’t think the DoJ has done enough at this point to back up that claim.

“The government has so far failed to show that vertical integration, even with must-have content, has historically led to higher prices for programming,” Greenfield wrote in a note to investors. “While predicting the outcome of a complex trial, particularly with a judge who has limited anti-trust case history, is challenging at-best, so far it appears the government has struggled to prove its theories of harm.”

Greenfield is not alone in his optimism for a go-ahead outcome. Before the trial started, CNBC “Mad Money” host Jim Cramer opined AT&T would likely win the case and that its stock was a “Buy.”

However, the market itself doesn’t seem as confident as Cramer does. Shares of AT&T are down about 5 percent from the stock’s closing price the trading day before its trial began on March 19. As for Time Warner, well, its stock is up all of 6 cents since just before the opening gavel.

Here are snapshots of the past month of trading for both public companies:

Meanwhile, John Bergmayer, senior counsel for telecommunications and internet law public interest advocacy group Public Knowledge, argues that the DoJ has actually made a pretty strong case.

“They have presented good evidence that there has been a violation of the Clayton Act,” Bergmayer told TheWrap, referring to the 1914 antitrust amendment that focuses on price discrimination, price fixing and unfair business practices.

“And I think [the DoJ’s star witness, economist and Berkeley professor] Carl Shapiro presented a strong case and held up to some tough questioning.”

On Wednesday, Shapiro testified that if the proposed combination of AT&T-Time Warner is approved, consumers could be paying an extra $571 million annually by 2021. AT&T-Time Warner’s witness disagreed but, Bergmayer told TheWrap, “AT&T’s counter-evidence, by contrast, isn’t persuasive, and it often just promises that the company wouldn’t do the things it has every economic incentive to do.”

Right now both sides appear to be hitting the notes they need to hit, according to Georgetown economics and law professor Steven Salop.

“It’s very hard to know who’s winning. It’s not like a football game,” Salop told TheWrap. “A lot is going to rest on how the judge interprets and uses in his analysis the AT&T-Time Warner arbitration provision.”

The arbitration provision essentially says that AT&T won’t black out Time Warner channels during negotiations with carriers, and it requires the combined company to enlist an arbiter to use fair market value to determine prices for things like licensing fees.

But in an article cowritten with Public Knowledge CEO Gene Kimmelman this month, Salop said he doesn’t think the arbitration is enough. Among the many issues Salop and Kimmelman identify is that the agreement doesn’t include HBO, nor does it include any new Time Warner networks.

At this point, how the trial shakes out all comes down to Richard Leon of the United States District Court for the District of Columbia, a judge who is not an antitrust expert. In other words, your guess is as good as ours (or Greenfield’s, or Cramer’s, or Shapiro’s, or Bergmayer’s, or Salop’s, or…)

AT&T and Time Warner did not respond to TheWrap’s requests for comment on this story. A rep for the U.S. Department of Justice did respond, though just to say, “Per Judge Leon’s instructions to the parties, we aren’t commenting on the case.”

Related stories from TheWrap:

Court Rejects AT&T's Request to See White House Emails on Time Warner Acquisition

Time Warner Q4 Earnings Up as HBO Caps Year of Record Subscriber Growth

AT&T Tops Q4 Earnings Forecast as Time Warner Acquisition Must Wait

Time Warner Shares Have Another Up Day On AT&T-DOJ Trial Optimism

As the third week of the Department of JusticeAT&T antitrust trial wound to a close, Time Warner stock posted an eighth straight day of gains, rising half a percentage point to finish the day at $96.39.
Many investors appear to have an optimistic takeaway from the trial thus far, pushing Time Warner stock to its highest level since January and within reach of its high-water mark of $103.90 before the DOJ suddenly threw a flag. The case pivots on the issue of whether…

As the third week of the Department of Justice-AT&T antitrust trial wound to a close, Time Warner stock posted an eighth straight day of gains, rising half a percentage point to finish the day at $96.39. Many investors appear to have an optimistic takeaway from the trial thus far, pushing Time Warner stock to its highest level since January and within reach of its high-water mark of $103.90 before the DOJ suddenly threw a flag. The case pivots on the issue of whether…

On Eve Of AT&T-DOJ Trial, Media Business Weighs The Stakes

After one more delay (as a snowstorm pushed back opening arguments), Thursday’s unofficial kickoff to the United States v. AT&T in federal court in Washington means the heavy cloud of uncertainty shrouding the media business gets closer to dissipating.
The legal fight over the AT&T-Time Warner merger hasn’t brought deal flow to a halt, as many initially predicted, but it has ushered in a period of profound disorientation for everyone from creative talent to the executive…

After one more delay (as a snowstorm pushed back opening arguments), Thursday’s unofficial kickoff to the United States v. AT&T in federal court in Washington means the heavy cloud of uncertainty shrouding the media business gets closer to dissipating. The legal fight over the AT&T-Time Warner merger hasn’t brought deal flow to a halt, as many initially predicted, but it has ushered in a period of profound disorientation for everyone from creative talent to the executive…