AT&T Makes Case for Deal -- WSJ

By Brent Kendall Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 29, 2017).

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WASHINGTON -- AT&T Inc. and Time Warner Inc. said an explosion of online programming has spawned a "golden age for television -- and for consumers," in its first court filing countering government claims that their planned merger would stymie competition and hurt customers.

Antitrust officials at the Justice Department filed suit last week to challenge the deal, alleging AT&T's acquisition of Time Warner would give one company too much control in a rapidly evolving media landscape.

AT&T, in a formal written answer to the lawsuit on Tuesday, said the video marketplace is changing quickly and is "intensely competitive," and that nothing about the Time Warner deal would harm that.

AT&T said online rivals like Netflix Inc. and Amazon.com Inc. were spending billions of dollars on developing and streaming video content, and that leading tech companies like Apple Inc., Google and Facebook Inc. were doing the same.

The companies said there was nothing anticompetitive about combining Time Warner's content -- like HBO and the Turner networks -- with AT&T's distribution of video through its satellite, broadband and wireless networks. They said merging the two would bring benefits to the public.

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The Justice Department has argued that a postmerger AT&T would be able to use its expanded leverage to demand that rival cable and online video distributors pay more for the right to carry Time Warner's networks.

AT&T and Time Warner criticized that assertion, citing Google's new "YouTube TV" service, which launched with the four main broadcast networks, ESPN and other channels, but no Time Warner channels.

That example "confirms not only that the television ecosystem is awash in content, but that Time Warner's networks are not, in any antitrust sense of the word, essential to attracting and retaining subscribers," the companies said in the filing.

The companies also said that, contingent on the closing of the merger, Time Warner's Turner division has offered video distributors licensing terms for seven years that entitle those distributors to arbitration if they can't reach satisfactory agreements to carry the Turner networks, which include TBS, TNT and CNN. Turner also would be forbidden from "going dark" on those video distributors during any impasse that results in arbitration, the companies said.

A Justice Department spokesman said the government was reviewing the companies' filing.

The department's lawsuit, filed Nov. 20 in a Washington, D.C., federal court, heralds one of the biggest antitrust cases in many years.

U.S. District Judge Richard Leon hasn't yet scheduled any initial proceedings in court.

In a separate filing late Tuesday, AT&T and Time Warner proposed that Judge Leon start a trial on Feb. 20, 2018 and schedule 10 days of proceedings. The companies said they were at an impasse with the government on reaching a scheduling timeline. They said the Justice Department was proposing that a trial start on May 7, 2018, a date that would come after the merger agreement is set to expire on April 22, 2018.

Write to Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

November 29, 2017 02:47 ET (07:47 GMT)