(Bloomberg) -- AT&T Inc. Chief Executive Officer Randall Stephenson made his grandest pitch yet for the company’s planned takeover of Time Warner Inc., describing the $85 billion deal as a crucial step to the judge who holds the deal’s fate in his hands.
The company also made an unusual move during an antitrust fight: It unveiled a new product. Subscribers will soon be offered a $15-a-month online video package that doesn’t include sports, AT&T said, trying to back up its argument that consumers will benefit from lower prices.
Stephenson, who honed his defense of the Time Warner acquisition by selling it first to his board of directors and then to shareholders, testified Thursday in federal court in Washington that the merger will help the combined company compete with streaming rivals such as Netflix Inc. and Amazon.com Inc.
The AT&T CEO began his testimony by describing his 35-year history at the company. He got his first job at Southwestern Bell Telephone where his brother was an installation technician. He went on to describe AT&T’s history of investment and innovation.
“If you miss one technology cycle in this country, it may not kill you, but it will make you sick for a very long time,” Stephenson, 57, said under questioning by Daniel Petrocelli, the lead attorney for AT&T and Time Warner.
AT&T’s CEO was the final witness for the defense, which rested its case.
The Justice Department produced numerous witnesses over several weeks, including executives from AT&T’s competitors, seeking to show the merger will harm rivals and ultimately the public. The agency seeks to block the takeover over concerns that AT&T, the largest U.S. pay-TV provider, will increase prices for consumers and withhold content from other distributors.
“The premise on its face is absurd,” Stephenson said.
John Stankey, the AT&T executive in charge of planning the integration of Time Warner, addressed pricing concerns earlier in the day. That’s when he announced the new video plan, couching it as a cheaper option for DirecTV Now customers.
U.S. District Judge Richard Leon, who has already expressed some skepticism about the government’s case, brought up arbitration at the end of Stephenson’s testimony in a sign he views changes to Time Warner’s arbitration offer as a better option than blocking the deal.
Shares of Dallas-based AT&T gained 0.5 percent to $34.99 as 9:50 a.m. in New York on Friday. Time Warner rose 0.1 percent to $96.65.
AT&T and Time Warner, which dispute the government’s claim that prices will rise, have offered binding arbitration to pay-TV companies when programming negotiations reach a deadlock. The judge has asked other witnesses about the proposal.
Stephenson framed the merger as a logical next step for a serial innovator in a rapidly changing industry that will drive AT&T’s next stage of development in media and advertising. He said the company chose to pursue Time Warner after first trying to snap up smaller companies like a “string of pearls” -- a strategy that was deemed to be too slow.
New York-based Time Warner, on the other hand, offered AT&T the premium content it needed to compete with Netflix and Amazon, attract viewers and sell more targeted ads based on users’ interests and habits, he said.
In August 2016, Stephenson set up a meeting with Time Warner CEO Jeff Bewkes, where a “short lunch turned into a long afternoon” as the two men’s ideas came together. Bewkes testified in the trial on Wednesday.
“It met all of the needs of the strategy we were trying to pursue,” Stephenson said.
Under cross examination by Justice Department attorney Craig Conrath, Stephenson had quick responses to every question about the value of the merger and how the combined company might work with its competitors. There were no “gotcha” questions that left him stumped or surprising documents presented as evidence.
Stephenson conceded under questioning by Conrath that companies like Netflix and Amazon rely on broadband networks like AT&T’s to deliver their content to consumers, presumably to show that AT&T could discriminate against competitors to favor its own content.
The trial, now in its fifth week, will continue with a rebuttal phase by the U.S. and, eventually, closing statements. The Justice Department on Thursday called to the witness stand an expert to dispute AT&T’s claim the merger will lead to cost savings that can be passed on to consumers.
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