AT&T Slams Theory Behind Time Warner Suit as ‘Preposterous’

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(Bloomberg) -- AT&T Inc.’s attorney attacked the central claim in the government’s lawsuit to block its merger with Time Warner Inc., denying that the combined company could credibly threaten to deprive its pay-TV rivals of programs.

The attorney, Daniel Petrocelli, tried on Tuesday to undercut forthcoming testimony from competitors who say the combination would give AT&T more leverage in negotiations over content. Withholding Time Warner programming to gain an edge over competitors would be “catastrophic,” he said, because AT&T would lose revenue from distributors and advertisers.

“This is absolutely preposterous,” Petrocelli said.

Petrocelli’s remarks came as U.S. District Judge Richard Leon in Washington was considering a proposal by the Justice Department to conduct some of the testimony from AT&T’s rivals behind closed doors.

Craig Conrath, a lawyer for the government, said pay-TV companies shouldn’t have to reveal the strategy behind their negotiations with Time Warner.

“The merger’s going to change the bargaining leverage in these negotiations,” he said.

The judge postponed opening arguments in the case to Thursday due to a snowstorm bearing down on Washington. The Justice Department is asking Leon to block the $85 billion deal because it says it will lead to higher prices for consumers. The case is the first major antitrust suit brought under President Donald Trump and its outcome could influence how the U.S. reviews mergers of any two companies in similar industries.

The decision will require Leon to consider how the deal could affect competition, a predictive exercise that carries some uncertainty. The judge said Tuesday that was “unsettling.”

“This is very unusual,” he said. “In this case, I guess I have to get a crystal ball.”

The case is U.S. v. AT&T Inc., 17-cv-2511, U.S. District Court, District of Columbia (Washington).

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