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WASHINGTON (Reuters) – The U.S. Justice Department wants a judge to bar ATT Inc (T.N) from using a voluntary commitment it made on licensing content as part of its defense when an antitrust trial begins next week over the fate of the company’s planned $85 billion merger with Time Warner Inc (TWX.N), court documents show.
The Justice Department filed a lawsuit in November to stop ATT, which owns DirecTV and other products with 25 million subscribers, from buying movie and TV show maker Time Warner, which owns HBO and CNN, among many other channels. A trial is set to start on Monday.
The government argues the merger would hike pay TV subscribers bills by $0.45 a month, citing an expert analysis.
ATT contends that analysis is fatally flawed because it does not include its commitment for seven years to agree to binding arbitration over disputes with distributors like DISH Network Corp (DISH.O) or Comcast Corp (CMCSA.O) over licensing terms.
The commitment, ATT and Time Warner said in a legal filing released on Tuesday,“is a concrete assurance that this merger has never been about raising the price of Turner content.”
Time Warner’s Turner owns CNN, TBS, TNT and other networks that air news, sports and other programming. Last year, the government demanded ATT agree to divest Turner as one offer to approve the merger.
The Justice Department said in a separate filing that the ATT commitment was a“unilateral promise” that was not relevant to whether the transaction lessens competition. The government argues including the issue would“waste the court’s limited time and confuse the proceedings.”
ATT asked U.S. District Judge Richard Leon to reject the request. John Stankey, the head of ATT’s entertainment group who is set to head the combined company’s media business, said in a deposition that the company would not withdraw the commitment.
Leon is holding a closed-door pretrial conference with lawyers for both sides on Tuesday.
If Leon finds the transaction would harm competition, he could consider the commitment when he considers remedies, the Justice Department said.
The government’s analysis assumed the combined ATT Time Warner would have“bargaining leverage” that it could use to compel distributors to pay higher prices for Turner networks, citing a model by an economist, ATT said.
The Justice Department said 20 of 1,000 distributors had agreed to the arbitration offer made in November. ATT said it modeled the commitment on a provision of the terms of the Comcast acquisition of NBCUniversal.
Reporting by David Shepardson, Editing by Rosalba O’Brien