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Trial kicks off in US challenge to AT&T's $85-bn acquisition of Time Warner

The government is arguing a deal would hike a subscriber's monthly cable bill by 45 cents and raise prices for rival cable and online video distributors

Reuters  |  Washington 

An AT&T logo and communication equipment on a building in Los Angeles | Photo: Reuters

A trial that could shape the future of US media ownership kicks off in Washington this week as the Department of Justice seeks to block AT&T Inc's $85 billion acquisition of Time Warner Inc.

The Justice Department filed a lawsuit in November to stop the US No 2 wireless carrier, which owns DirecTV and other services with 25 million subscribers, from buying movie and TV show maker Time Warner, which owns HBO and CNN.

The government is arguing a deal would hike a subscriber's monthly cable bill by 45 cents and raise prices for rival cable and online video distributors.

AT&T denies that prices would rise and plans to argue the deal is necessary for it to compete with new media like Facebook Inc, Alphabet Inc, Inc and Netflix Inc, according to court documents filed before the trial.

AT&T rejected settlement offers from the Justice Department, including government proposals to shed either its DirecTV division or Time Warner's Turner Broadcasting assets, which include CNN.

Opening arguments are set for Wednesday after up to two days of hearings to consider objections on a number of motions.

AT&T Chief Executive Randall Stephenson, Time Warner Chief Executive Jeff Bewkes and programming executives from rival are expected to testify during the trial that Judge Richard Leon has estimated would last six to eight weeks.

Looming over the trial is the question of whether US President Donald Trump, who criticized the deal on the campaign trail and again as president, may have influenced the Justice Department's decision to oppose the transaction.

AT&T lawyers have said the Time Warner deal may have been singled out for enforcement, citing Trump's statements that the deal was bad for consumers and the country.

Leon last month rejected a bid by AT&T to force the government to disclose any White House communications that AT&T lawyers believe may have shed light on the matter. AT&T did not raise any arguments relating to Trump in its final pretrial brief filed earlier this month.

The outcome of the AT&T/Time Warner case could affect other pending "vertical" mergers, in which different parts of a supply chain, rather than rivals in the same business, join together. Health insurer Cigna Corp wants to buy pharmacy benefits manager Express Scripts Holding Co and CVS Health Corp wants to acquire health insurer Aetna Inc.


First Published: Mon, March 19 2018. 22:31 IST