US vs. AT&T: A Court Fight Over the Future of TV

Early signs suggest the legal fight over AT&T’s $85 billion Time Warner takeover will focus heavily on the small screen, drawing much of its evidence from the companies’ video rivals. Those competitors argue the telecom company will use Time Warner’s entertainment assets against them. Dish Network, Showtime owner CBS, 21st Century Fox, Netflix, and Starz are among the companies that have provided information that the US Department of Justice could use to bolster its case that the megadeal would hinder competition in the market for pay-TV content. Government lawyers have subpoenaed roughly 30 third parties for information in the case, Justice Department attorney Craig Conrath told federal judge Richard Leon at a pretrial hearing. Such requests are typical in high-profile antitrust cases. AT&T is also gearing up for the legal fight. The company has drawn up a wish list of 22 potential witnesses, while the government has requested up to 35, AT&T’s lead attorney Daniel Petrocelli said. Perhaps most central to the case is how the AT&T-Time Warner deal would affect rival video distributors. AT&T, which would own Warner Bros. as well as cable channels like TNT and CNN, has said that the television ecosystem is awash in content and that its deal won’t deter the industry transformation that is taking place. AT&T has argued that the emergence of newer platforms like Netflix and the entry of tech giants like Amazon Inc. into video content means that new consumers will still be able to choose among traditional TV services and online services regardless of what the telecom company does with Time Warner. The Justice Department sees things differently, arguing that a postmerger AT&T could force rival TV providers to pay more for Time Warner content like Cartoon Network and TNT, which broadcasts many NBA games. It also argues that AT&T’s control of Time Warner could hinder innovation in online TV packages that have drawn growing interest from consumers looking to drop traditional cable or satellite service.