To Assuage DOJ Concerns About It Buying TW, AT&T Notes Long Licensing Terms

Time Warner is offering MVPDs seven-year licensing terms aimed at assuaging DOJ concerns about its pending takeover by AT&T, with those terms contingent on AT&T/TW closing, the telco said its docket 1:17-cv-02511 reply (in Pacer) filed Tuesday in U.S. District Court for the District of Columbia. It responded to Justice's lawsuit earlier this month seeking to block the deal (see 1711210005). The department didn't comment.

AT&T said it took Comcast/NBCUniversal -- approved with behavioral conditions -- as a sign that that it was going to be able to come to agreement with DOJ. It said the seven-year licensing terms being offered by TW's Turner to MVPDs are similar to protections Justice adopted in Comcast/NBCU. Those terms are: guaranteed "baseball-style" arbitration if the MVPD can't reach a satisfactory distribution agreement for Turner networks and a ban on a Turner blackout during the arbitration process. It said that if the MVPD and New AT&T reach an impasse over Turner content, the two sides will offer respective best offers to an arbitrator, with the arbitrator choosing the one that best represents fair market value.

Turner is offering those terms to MVPDs "as clear proof ... [it] will have no greater incentive" to increase Turner content pricing, and thus DOJ allegations of competitive harm "are wholly without merit," AT&T said. Some say DOJ lacks a strong antitrust case (see 1711220005).

AT&T's reply also said Justice hasn't met the threshold burden of proof showing the deal would give New AT&T enough market power in the distribution and content markets to cause antitrust concern. It and TW don't have "imposing market share or anything near it," AT&T said, criticizing the suit for making "no meaningful effort" to establish a factual predicate of market power and lacking any empirical evidence demonstrating consumer harm. It pointed to virtual MVPD YouTube TV, which contains no TW channels, as proof of a TV universe "awash in content" and that TW channels aren't essential in an antitrust sense. It challenged the complaint as containing material taken out of context so as to be misleading.

The would-be acquirer asked for trial to be scheduled for Feb. 20, in a separate motion (in Pacer) Tuesday. It said the merger deadline originally agreed to by the companies has now been moved six months, to April 22, and that after the suit it notified the government it hoped for an expeditious schedule that would result in a decision before that deadline. It said the agency is proposing a May 7 date for commencing trial. It said the department "has had ample time already to investigate," with the later start of trial unwarranted.