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Bloomberg
AT&T Inc. and Time Warner Inc. may have gained an edge in the biggest merger trial in decades as the companies have exposed weaknesses in the Trump administration’s antitrust lawsuit to block their $85 billion merger, according to lawyers and economists following the battle.
As the US rested its case in the fifth week of the trial, AT&T and Time Warner have poked holes in the Justice Department’s claim that the deal would give them the power to raise prices on cable and satellite-TV competitors, and disadvantage competitors by coordinating with Comcast Corp., a major rival that went through a similar merger when it bought NBCUniversal.
The corporate titans themselves will face off against the government’s antitrust enforcers with Time Warner Chief Executive Officer Jeff Bewkes expected to take the stand, followed by AT&T’s CEO Randall Stephenson on Thursday.
At the heart of the case is this: AT&T, which owns DirecTV, is the biggest pay-TV company in the US, while Time Warner’s Turner Broadcasting is the owner of numerous popular networks including CNN, TBS and TNT. The US claims the combination is a recipe to raise prices for subscribers of AT&T’s competitors by more than $400 million a year.
And all of this, the US says, risks stunting the entrance of newer companies that threaten the traditional cable model, including streaming services such as Dish Network Corp.’s Sling TV that offer smaller bundles of networks to consumers seeking new ways to watch. Investors have become more confident AT&T will win, based on the difference between the offer price of $104.56 and Time Warner’s share price. The spread is lower than when the lawsuit was filed in November and has declined since the trial started last month.