Appearing yesterday in the DOJ’s lawsuit trial to stop AT&T from buying Time Warner Inc., RCN CEO Jim Holanda followed what has become a familiar path for executives in the pay TV business who have been tapped as witnesses for the DOJ.
First, Holanda testified that RCN would see its leverage harmed in programming negotiations if AT&T were able to buy Time Warner Inc., corporate home of Turner Networks, HBO and other key programming assets. Holanda said he had the same misgivings when Comcast bought NBCUniversal in 2011.
Then came the cross-examination from AT&T and Time Warner lawyers—which was, once again, withering. (The trial has been covered extensively by Bloomberg and other outlets.)
When asked by AT&T attorney Rob Walters if RCN had any hard data to suggest it would lose pay TV subscribers to a consolidated AT&T and Time Warner, Holanda conceded he didn’t have those numbers—a refrain made by several other DOJ witnesses under similar cross-examination.
Holanda was also made to concede that the record number of video defections his company is experiencing is tied far more closely to the broader trend of cord cutting than it is the superior forces of consolidated competition.
RCN is an overbuilder jointly owned by TPG and Alphabet Inc.’s venture capital fund.
And for their part, Walters and Holanda had their tensest exchange when the lawyer asked the CEO why Time Warner’s offer of baseball arbitration in programming negotiations wasn’t enough to relieve the anxiety of merger opponents like RCN.
Baseball-style arbitration is insufficient, Holanda said, because it forces operators to make their “best and final” offer without being able to see what other operators are bidding for the same programming.
“Aren’t you effectively saying ‘I don’t want to bet until I see your cards?’” Walters asked.
Government attorneys have now rested their case. AT&T began calling witnesses last week.