AT&T/TW Assails Dish Claims About Turner Being Must-Have Programming

Dish Network claims about the must-have nature of Turner content (see 1803260047) were criticized in an occasionally contentious cross-examination of Sling TV President Warren Schlichting Tuesday in the U.S. v. AT&T and Time Warner trial in U.S. District Court in Washington. Referring to Schlichting's comments about blackouts being like a heart attack and costing lasting damage to an MVPD, defendants' outside counsel Dan Petrocelli of O'Melveny said Dish "had had a lot of heart attacks. You take down programmers left and right." Retorted Schlichting, noting programmers' roles in blackouts, "it takes two to tango." Asked whether blackouts are part of Dish's strategy, Schlichting wouldn't answer.

DOJ in turn, while questioning Turner CEO John Martin, brought up numerous exhibits pointing to the strength of Turner programming. Justice had Martin confirm multiple emails prepared for him internally in advance of TW earnings calls, with the emails containing information about topics from rapidly growing Turner domestic affiliate revenues to increased viewership for CNN.

Petrocelli spent several minutes asking about all the major sports leagues not carried on a Turner network -- such as the NFL, NCAA football, NASCAR or the NHL -- and about March Madness being available by means other than via Turner. He also asked multiple questions about the lack of broadcast programming on Sling's Orange package. He repeatedly asked about CNN being must-have given Dish's 2014 CNN blackout. Asked about Dish Chairman Charlie Ergen statements then that CNN had been must-have years ago but no longer, Schlichting said that was "negotiating in the press." He also said CNN viewership has been growing recently. Petrocelli asked similar questions Thursday of Cox Communications, challenging the supposed must-have nature of Turner content (see 1803220033).

Ergen was a central figure in the cross-examination, with Petrocelli repeatedly citing past comments by Ergen about Turner content and about how there are no networks where going dark is not an option, and then asking Schlichting to respond. Asked about Ergen statements in 2014 that Turner networks are the easiest to take down, Schlichting said, "You can make a true statement in the middle of negotiations and send a message." He also said he disagreed that Turner networks are the easiest to take down.

Petrocelli argued New AT&T wouldn't affect Dish's approach. With New AT&T, would Ergen still be "a strong negotiator?" he asked. "Charlie's Charlie," Schlichting replied. Schlichting said Ergen "is rational" and would have to respond to a different set of facts with New AT&T.

Other Dish blackouts include CBS last fall and in 2013, Fox News and Fox Business in 2014, AMC in 2012, a variety of Disney channels, Weather Channel and MSG in 2010, Lifetime in 2006, Outdoor Life Network in 2005, and Viacom in 2004, Petrocelli said.

The 2014 blackout of some Turner networks -- which didn't involve TNT or TBS -- resulted in 13,700 Dish subscribers calling to cancel service because of that blackout, Schlichting testified. He said Dish's internal estimate is that the actual toll was 30,000 lost subscribers. Schlichting acknowledged under questioning from Petrocelli that those numbers also might include subscribers lost from the Fox blackout. He also acknowledged under questioning that in its dealings with DOJ, Dish submitted suggested conditions on AT&T/TW that included baseball-style arbitration terms, though he added that the arbitration terms offered by Turner don't alleviate the concerns about the deal. Schlichting and Petrocelli also went back and forth over whether New AT&T's wireless business would benefit with people watching virtual MVPDs like Dish's Sling over that wireless network.

U.S. District Judge Richard Leon of Washington also questioned Schlichting directly, asking whether Dish ever presents data about underperforming networks it's contractually forced to carry to programmers. Schlichting said yes, but that data "has almost no bearing on the outcome" of still being forced to carry them. "It's just a leverage game."