Turner CEO: No reason to hold back networks post AT&T merger

By Jessica Toonkel

(Reuters) - Turner Chief Executive John Martin told a U.S. court on Wednesday that there is no incentive for the company to hold back its networks, which include CNN, TBS and TNT, from other distributors if parent Time Warner is bought by AT&T Inc .

The U.S. government wants to stop the $85 billion deal, arguing that it would hurt consumers because AT&T, which owns pay TV service DirecTV, would have more leverage to raise prices by owning Time Warner Inc's Turner networks.

Wednesday's testimony was the fourth day of the trial in U.S. District Court in Washington, D.C. that is due to last six to eight weeks.

The government claims that Time Warner would have an incentive to hold back Turner content from distributors that compete with AT&T and DirecTV.

"I would like every distributor to carry every network I have and carry it at 100 percent penetration," Martin said, when he was cross-examined by AT&T attorney Daniel Petrocelli.

Specifically, online streaming services, such as Dish Network Corp's Sling TV and Hulu, in which subscribers pay between $20 and $40 to watch a select number of networks live and on-demand, are key for Turner given that revenue through the cable and satellite companies is decelerating, he said.

These services "are the only source of growth," he said, comparing them to traditional cable and satellite companies that are losing customers.

Martin took the stand on Tuesday afternoon as an adverse witness by the U.S. Department of Justice.

Department of Justice attorney Eric Welsh grilled Martin on the importance of Turner's sports rights with the National Basketball Association, "March Madness" college basketball tournament and Major League Baseball to other distributors.

When asked about the costs of these rights, U.S. District Judge Richard Leon expressed surprise to learn that Turner paid $1.1 billion.

"That was the fee to the NBA?" Leon asked.

Leon also pressed Martin to explain how he knew that viewers of its sports programming were "engaged."

"What is engaged ... they are watching it," he said. "How do you know they are fans?" Martin responded that Turner looks at aggregate viewership data as well as surveys.

Welsh pressed Martin on whether the sports programming was "must see TV," noting that the executive had referred to it many times as such in internal memos and interviews.

"Must have is another way of saying we have popular programming," Martin said.

(Reporting By Jessica Toonkel; Editing by Susan Thomas)