In antitrust trial, DOJ claims memo shows AT&T-Time Warner are merging to protect pay TV business

Time Warner Center. Image courtesy of Time Warner, Inc.
The DOJ presented a "cash cow" memo in its case against the AT&T-Time Warner merger. (Image: Time Warner Inc.)

As the antitrust battle between the Department of Justice and merger hopefuls AT&T and Time Warner moved through its third week in court, the government accused the companies of trying to shore up their lucrative pay TV business at the expense of rivals—and presented a memo as proof. 

It was a draft document from April 2017 created by an AT&T executive touting the combination as a way to “ensure stability” of the pay TV business. The memo said the business was in a “slow, structural decline” but would be a “cash cow” for years to come, according to press reports.

The DOJ had sued to block AT&T’s $85.4 billion acquisition of Time Warner for what it claimed was that very reason—that a merged company could raise prices for pay TV rivals and slow the development of online video. During opening arguments in the trial last month, the Justice Department’s lead attorney called pay TV the company’s “cash cow,” according to a report in Variety.

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The language in Manty’s memo was later adjusted by the company to read “encourage stability.”

In a hearing before U.S. Judge Richard Leon, the executive, Gregory Manty, was asked by DOJ attorney Julie Elmer if the document had been “sanitized” but rejected the characterization. 

“I wouldn’t use the word ‘sanitized,’” Manty said, according to Variety, noting that it had been used in discussions with Time Warner about potential integration. “It’s highly regulated,” Manty said. "That’s why it’s overseen by lawyers.” 

Manty, a director of corporate strategy, had created the document for the use of the corporate integration teams but said that he was not among the top executive rank of the company and had nothing to do with putting the merger together.

The trial, which began in mid-March in the U.S. District Court in Washington, is expected to wrap up this month.

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