Streaming soon: A fight over AT&T, Time Warner, and the future of TV

How you watch Game of Thrones and CNN is about to have its day in court.
 
The Justice Department’s bid to block AT&T’s $85 billion merger with Time Warner is set to head to trial next week, in one of the most anticipated antitrust battles in years.
 
The deal, if approved, would create a media giant that combines AT&T’s nationwide mobile and satellite distribution networks with Time Warner’s huge collection of popular movies and television offerings, including Game of Thrones on HBO, news on CNN and college and professional basketball on TNT. The central question of the trial: Would that combination hurt consumers or help them?
 
How the judge rules in the case has the potential to shape the fast-changing business of video, as consumers increasingly turn to streaming services instead of traditional cable TV. AT&T, a nationwide satellite TV and wireless provider, argues that pairing up with a major content company is necessary to compete against the reach and resources of tech giants like Netflix and Amazon. But the Justice Department says the deal would hurt upstart streaming services and lead to higher prices for consumers.
 
The decision will frame the competition among Silicon Valley, Hollywood and Madison Avenue, while also establishing what kinds of corporate mergers — in the media industry and beyond — will be permitted in the years to come.
 
“This court case is so important it is hard to know where to start,” said Amy Yong, a research analyst at the investment firm Macquarie. “This case is at the heart of what we do in our everyday lives.”
 
The Justice Department’s move to block the deal in November took Wall Street and the entertainment industry by surprise. Many executives and lawyers thought President Trump’s administration would usher in a hands-off approach to antitrust enforcement, despite Mr. Trump’s criticism of the deal on the campaign trail. Instead, the Justice Department, under its antitrust chief Makan Delrahim, moved aggressively, demanding the sale of major parts of the businesses before a deal could go through. AT&T responded by suggesting that Delrahim’s decision was politically motivated and not based on established antitrust law.
 
In recent weeks, though, the judge overseeing the case, Richard Leon of the United States District Court of the District of Columbia, has rejected moves by AT&T to inject politics into the arguments.
 
Unless the two sides settle — and there have been no signs of that happening — the trial is expected to showcase two starkly different visions of the country’s video future. Drama is also in the cards: Executives from AT&T and Time Warner, as well as competing cable, satellite, tech and media firms, are expected to take the stand over the course of several weeks — and possibly reveal details about the inner workings of the industry.
 
The Justice Department argues that the merged company’s combination of distribution and content would give it too much leverage in negotiations with the rest of the industry. It also says that the new company would demand higher licensing fees from other cable and satellite firms for what the government calls “must-watch” programming. Those higher charges would immediately trickle down to consumers at an estimated cost of 45 cents a month, or a combined $436 million annually for cable and satellite subscribers, the agency said.
 
The government’s case will be led by Craig Conrath, a plain-spoken and longtime litigator who has worked on merger cases for several administrations. He is expected to argue that if the merger is approved, AT&T and Comcast, a corporation that owns distribution and programming — the same combination that AT&T is seeking — would have the incentive to raise prices for access to their shows. That would hurt other cable companies and online streaming businesses.
 
Judge Leon oversaw the final approval of Comcast’s merger with NBC Universal in 2011, the dealadded programming to Comcast’s holdings. “Either important video content will be available through a competitive market to all distributors, including up-and-coming innovators,” the Justice Department said in pretrial filings. “Or it will likely only be available through vertically integrated, well-funded silos.” AT&T scoffs at the government’s predictions of price increases. And even if the analysis is accurate, the company has said, it would amount to the price of a fancy cup of coffee for each consumer.

©2018 The New York Times News Service