AT&T has officially fired back at the U.S. Justice Department’s lawsuit to block the $85 billion Time Warner merger and has begun pushing for a trial start date in February 2018.
In AT&T’s lengthy response to the DOJ’s complaint, the company said that the Time Warner deal will be a “pro-competitive, pro-consumer response to an intensely competitive and rapidly changing video marketplace.”
That’s in response to claims from the DOJ that AT&T will use its control of Time Warner’s programming to jack up prices for its rival pay TV providers.
“This merger would greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy,” said Assistant Attorney General Makan Delrahim in a statement. “AT&T/DirecTV’s combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction.”
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As a remedy to that potential problem, AT&T has offered to submit to baseball-style arbitration with distributors if the deal is approved. That means that, for at least seven years, distributors of Time Warner content including TBS, TNT, CNN and HBO could enter arbitration if the parties can’t agree on terms for wholesale rates. In that event, Turner channels would remain on the distributor while the process plays out.
While responding to the DOJ’s complaint, AT&T has also requested the court date be set at Feb. 20, 2018.
“These documents offer even more conviction to our belief that AT&T is gearing up for a courtroom fight (this seemed obvious based on attorney it retained),” said Wells Fargo analyst Jennifer Fritzsche in a research note. “We would view a February start as a positive as it could help start an ‘expedited’ trial which was AT&T’s original request. Recall, AT&T’s entire org structure was changed last July with the thought that AT&T/Time Warner deal would be closed by YE17.”
But the DOJ is pushing for a May 7 court date and requesting the trial last at least 15 days. AT&T and Time Warner yesterday extended the merger deadline out to April 2018, but the DOJ’s court date request would push out past that.
“Under the Government’s proposed schedule, the merger agreement would expire before this case would even be tried,” said AT&T in a motion filed with the court. “The Government could effectively run out the clock on this merger without ever having to prove its case.”
AT&T said that another extension would expose numerous stakeholders to risks and that the government has already had an “enormous head start” in preparing to litigate.