Matt Daneman

Turner has used HBO as leverage in MVPD affiliation negotiations, Turner Classic Movies President Coleman Breland testified Monday in U.S. v. AT&T and Time Warner. Breland -- who until last year was Turner's head of content acquisition and negotiations, was called by DOJ as an adverse witness. The agency spent part of the day walking Breland through Turner emails covering such topics as strategy and the array of near-blackouts the company saw in recent years.

Facing DOJ assertions that a permanent Turner blackout could cost an MVPD 12 percent of its subscriber base, counsel for AT&T and Time Warner on Thursday went after the study the agency commissioned that came to that conclusion. "You can't reconcile" that past temporary Turner blackouts resulted in sub losses of a fraction of a percent for MVPDs with the model that indicates a shorter, one-month Turner loss would mean an 8.2 percent departure rate, said Peter Barbur, of Cravath Swaine, during the court argument. "I believe my numbers are accurate," replied John Hauser, Massachusetts Institute of Technology professor of marketing and a surveying expert.

When Time Warner was a vertically integrated company, encompassing both programming and Time Warner Cable, the notion of blacking out other distributors to get higher prices or to drive subscribers to TWC, or that Turner enjoyed more leverage due to that vertical integration, never came up, Turner CEO John Martin testified Wednesday in the U.S. v. AT&T/TW trial. An adverse witness for DOJ, Martin under questioning from AT&T/TW counsel attacked many of Justice's central tenets in the case.

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.

Negotiating for Turner content with New AT&T would put Dish Network between a rock and a hard place -- either accept onerous programming terms and rates or lose must-have programming, meaning subscribers likely would will defect to AT&T's DirecTV. So testified Sling TV President Warren Schlichting Monday in U.S. v. AT&T and Time Warner. Meanwhile, U.S. District Judge Richard Leon of Washington raised the specter of contempt of court charges after admonishing counsel on both sides to ensure witnesses who aren't experts aren't made privy to testimony of other witnesses.

The judge overseeing the AT&T/Time Warner antitrust trial almost surely will evaluate the evidence and law dealing with the proposed vertical merger the same way he would a horizontal deal, experts told us. In opening argument Thursday (see 1803220033), companies' outside counsel Dan Petrocelli of O'Melveny told U.S. District Judge Richard Leon of Washington, "You're not going to need a crystal ball," since horizontal deals inherently reduce competition while verticals lead to increased business efficiencies and innovation.

Section 7 of the Clayton Act says a deal shouldn't go through if there's reasonable probability it harms consumers, and New AT&T's ability to do that via Time Warner content and its incentive to do so due to its "massive investment" in the traditional MVPD space shows that probability, said DOJ antitrust trial attorney Craig Conrath during opening argument Thursday in DOJ v. AT&T and Time Warner in the U.S. Court of Appeals for the D.C. Circuit. By ignoring over-the-top competitors and digital advertising, DOJ is "fundamentally stuck in the past," companies' outside counsel Dan Petrocelli of O'Melveny replied. A Washington executive says similar.

DOJ is trying to fit AT&T's buy of Time Warner, a vertical merger, into a horizontal merger hole and put the burden on the defendants to prove the case for why the deal is good, when it's up to the government to prove why it's bad, AT&T/TW outside counsel Dan Petrocelli of O'Melveny said Tuesday during evidentiary hearings on the trial's second day. He said the sides have a fundamental legal disagreement on the issue. DOJ attorney Craig Conrath said New AT&T has both positive and negative competitive effects, but the positive effects are quite small, and AT&T has to show those benefits will reach consumers.

AT&T will move to have its DirecTV subsidiary dismissed as a defendant in the DOJ lawsuit seeking to block its Time Warner takeover, AT&T/TW outside counsel Dan Petrocelli of O'Melveny said Monday, the opening day of trial. Opening argument will be Wednesday, U.S. District Judge Richard Leon of Washington said, saying the sides estimated a trial of four or so weeks, but "it's looking more like six to eight." AT&T will move for the dismissal by the time Justice has finished presenting its case, Petrocelli said.

Faced with dueling claims about subscriber departure rates if a competing video service were denied Time Warner content, questions about what horizontal merger standards apply in a vertical deal, and a host of other disputed issues, U.S. District Judge Richard Leon of Washington has a heavy adjudication workload before him in the trial of DOJ's lawsuit seeking to block AT&T/TW. That's the consensus of legal and economic experts at an American University-hosted seminar Thursday on the antitrust trial.