March 29, 2018 / 7:40 PM / 2 years ago

AT&T trial hears of consequences if Turner networks go dark

(Reuters) - Twelve percent of subscribers would quit their cable or satellite companies if Time Warner Inc’s TWX.N Turner networks were no longer available, a Massachusetts Institute of Technology marketing professor said on Thursday.

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

John Hauser, who teaches marketing, was the fourth witness to be called by the U.S. Justice Department in its lawsuit to block telecommunications company AT&T’s (T.N) $85 billion deal to buy Time Warner.

The U.S. government opposes the deal, arguing that it would hurt consumers because AT&T, which owns pay TV service DirecTV, would have more leverage to raise prices by owning Time Warner’s Turner networks.

Hauser’s findings are important to the Department of Justice’s case because his data shows that AT&T, once it owns Time Warner, could hurt rivals to the point of perhaps costing them 12 percent of their subscribers by withholding Time Warner in the event of a price dispute.

But Greg Rigdon, executive vice president of content acquisition for Comcast Corp (CMCSA.O), seemed skeptical of that figure when pressed to compare data on how many subscribers a company would expect to lose if they dropped a channel, called “drop analyses,” with real world data.

“I don’t think I’ve seen a major drop-off for 12 months,” he said, while noting that he had never experienced the loss of major content like Turner’s family of channels.

Rigdon also noted that he did not expect AT&T’s acquisition of Time Warner to affect Comcast. “I don’t have any reason to believe that it will impact my relations with Turner,” he said.

In cross-examination of Hauser, Peter Barbur noted that Warren Schlichting, group president of Dish’s Sling TV, testified on Tuesday that 30,000, or 0.25 percent, of its subscribers dropped Dish when Turner programming went dark for about a month in 2014.

Barbur, who represents Time Warner, also said that Cable One provided testimony that it lost less than 1 percent of subscribers when Turner’s networks went down for about a month in 2013.

“Instead of looking at real world data on blackouts, you were retained to do a survey,” Barbur said.

Hauser said that without knowing the entire scenario of those situations, it was hard to say why the results differed from his findings. “I believe my numbers are accurate,” he said.

The trial, which is taking place in the U.S. District Court in Washington, is expected to take six to eight weeks.

Reporting by Jessica Toonkel and Diane Bartz; Editing by Susan Thomas and Tom Brown

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