Judge weighs what evidence U.S. can use to block AT&T, Time Warner merger

By Diane Bartz and David Shepardson

WASHINGTON (Reuters) - AT&T Inc sought to persuade a judge on Monday to throw out evidence the government seeks to use in a trial that begins this week to show that the company's $85 billion acquisition of Time Warner Inc would harm consumers and competitors.

The Justice Department filed a lawsuit in November to stop the U.S. 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. Opening arguments in the trial, which could shape the future of U.S. media ownership, are set for Wednesday before Judge Richard Leon in Washington.

On Monday, Daniel Petrocelli, the lawyer for AT&T, argued that many exhibits that the government planned to bring should be rejected either because they were irrelevant or because the person writing them was not a decision-maker.

Petrocelli objected, for example, to a document from DirecTV that was written before it was acquired by AT&T that warned of the dangers of higher prices because of a previous media merger. The Justice Department's Eric Welsh defended the decision to present it. "They are also a market participant," he said.

Welsh also indicated that an official from Google's YouTube could testify on the importance of the Turner channel to DirecTV's rivals, which would help show AT&T's future ability to raise prices.

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.

The government has argued that the deal could allow a more powerful AT&T to raise prices for pay TV rivals and subscribers while hampering the development of online video. They estimate it will hike a subscriber's monthly cable bill by 45 cents.

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

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

Looming over the trial is the question of whether U.S. 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 .

(Reporting by Diane Bartz and David Shepardson; Editing by Bill Rigby and Lisa Shumaker)