The Justice Department argues that the merger would force viewers to pay hundreds of millions of dollars more.
WASHINGTON — The U. S. government pleaded its case Monday for blocking AT&T from absorbing Time Warner, saying it would hurt consumers as a big antitrust trial crept toward its end and a decision by a federal judge.
The $85 billion proposed merger is a “big deal,” Craig Conrath, the lead Justice Department attorney, said on the last day of the trial in federal court. “It would have a massive effect on the structure of the pay TV industry.”
The Justice Department sued in November to block the deal, saying it would force consumers to pay hundreds of millions of dollars more to watch their favorite shows, whether on a TV screen, smartphone or tablet. Conrath told U. S. District Judge Richard Leon that if he doesn’t block the merger outright, he should consider ordering other remedies such as “partial divestitures.” That could mean, for example, that AT&T wouldn’t be able to acquire key parts of Time Warner like Turner Broadcasting that include CNN, Conrath said.
AT&T has previously rejected any option that would cause it to lose control of CNN.
Conrath said evidence presented by the government during the six-week trial showed that by hurting competition in that industry, the deal “would impose substantial harm on consumers” and raise prices.
The merger would combine the phone giant with the owner of CNN, HBO, the “Harry Potter” franchise and pro basketball. It would be one of the biggest media mergers ever. The outcome of the case could shape how consumers get – and how much they pay for – streaming TV and movies.
It wasn’t clear whether Conrath’s suggestion of alternatives to blocking the merger indicated the government may be anticipating that it could lose the antitrust suit. Separately, there was a sign that AT&T may be under increased pressure to achieve the deal: The announcement Sunday of a merger agreement linking T-Mobile and Sprint, the third- and fourth-largest U. S. wireless companies, giving them bulk to more tightly compete against industry leaders AT&T and Verizon.
AT&T and Time Warner have insisted throughout the trial that their deal wouldn’t hurt competition in the booming pay TV business. An economist who was one of the companies’ lead witnesses said that in fact, consumers could end up paying less after a merger.
The companies’ lead attorney in defending the deal, Daniel Petrocelli, has said the rapid transformation of the media and entertainment landscape is what makes the merger “imperative.”
AT&T, a wireless, broadband and satellite behemoth, became the country’s biggest TV provider with its purchase of DirecTV. The largest pay TV company, it accounts for a substantial portion of AT&T’s earnings. DirecTV claims about 25 million of the 90 million or so households in the U. S. that are pay TV customers.
To lure wireless customers, AT&T offers discounts on DirecTV and could soon do so with HBO.
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