March 26, 2018 / 10:40 PM / in a month

DISH executive testifies against planned AT&T merger with Time Warner

WASHINGTON (Reuters) - A top executive of DISH Network Corp (DISH.O) argued on Monday that AT&T Inc’s (T.N) planned purchase of Time Warner Inc (TWX.N) would give AT&T too much power to block competitors’ access to crucial content.

An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni

The U.S. government is seeking to stop the $85 billion deal, arguing that it would hurt consumers. Monday’s testimony was the second day of the trial that is due to last six to eight weeks.

Testifying for the government, Warren Schlichting, who negotiates to buy programming for DISH’s satellite and its Sling internet business, said that his company needed to have the rights to broadcast some Time Warner content, especially news like CNN and sports, like college basketball’s March Madness, in order to attract and keep subscribers.

“It’s hard to imagine spring without March Madness. It’s hard to imagine an election without CNN,” he said.

The clout that the deal would give AT&T in negotiating with pay TV competitors is why Justice Department filed suit in November to stop AT&T, which has some 25 million pay-TV subscribers, from closing the merger. AT&T says a merger would benefit consumers by creating efficiencies.

Schlichting agreed that AT&T’s purchase of Time Warner would give it the incentive to sharply raise rates or withhold Time Warner’s sports, news, movies and TV shows if the judge hearing the case allows the merger to go forward.

“We need each other now,” he said. “With the merger that changes 180 (degrees).”

Schlichting’s testimony echoed that of Cox Communications content buyer Suzanne Fenwick, who last week described Time Warner’s movies, television shows and sports programming as “must-have content” for the cable TV provider.

Monday’s hearing was delayed because Schlichting’s counsel gave him transcripts of opening arguments and Fenwick’s testimony from last Thursday, which is not allowed, said Judge Richard Leon, who is deciding the case.

“If this happens again, hopefully it will not, the witness will be struck,” he said.

If the government loses, that could open up the field for more tie-ups between distributors and content providers. But a win could strengthen the hand of antitrust regulators looking at other, similarly structured mergers.

Unlike most merger trials, this one is closely watched in political circles since President Donald Trump publicly criticized the deal as a candidate and as president, and the Republican president often has excoriated Time Warner’s CNN news network.

    Reporting by Diane Bartz; Editing by Cynthia Osterman

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