U.S. appeals court hears arguments on stopping AT&T purchase of Time-Warner Express News

WASHINGTON (Reuters) – A three-judge appeals court panel on Thursday questioned the U.S. Justice Department’s challenge to a lower court approval’s of AT&T Inc’s $85.4 billion acquisition of Time Warner.

Coaxial TV Cables are seen in front of AT&T and Time Warner logos in this picture illustration taken June 13, 2018. REUTERS/Dado Ruvic/Illustration

“Where is the clear error?” U.S. Judge Judith Rogers asked Justice Department attorney Mike Murray, who called the lower court’s approval of the deal “myopic.”

“You have to show that there’s a harm to competition,” Judge David Sentelle said at another point. “Remember where the burdens are,” he added later.

Much of the argument at the U.S. Court of Appeals for the District of Columbia delved into whether a lower court judge, U.S. District Judge Richard Leon, properly treated economic models of the merger’s impact on future prices for pay-TV customers and AT&T’s offer of third-party arbitration to resolve pricing disputes with distributors for seven years.

The core of the Justice Department’s concern has been that AT&T, which owns DirecTV, would use its ownership of Time Warner’s content, such as CNN and HBO’s “Game of Thrones,” to make pay-TV rivals pay more, thus raising their costs and forcing them to charge consumers more.

AT&T lawyer Peter Keisler cast doubt on the government’s economic model, which predicted consumers would face a price hike after the merger.

But Keisler faced questions over an arbitration offer that AT&T made to smaller pay-TV companies, pledging that it would not black out Time Warner’s Turner content if a negotiation dispute arises with smaller pay-TV rivals.

“Of course, we will honor it,” he said.

“We take you at your word,” said Judge Rogers.

The government is asking for the lower court case to be reversed and remanded.

The merger, which was announced in October 2016, closed on June 14 shortly after Leon ruled the deal was legal under antitrust law, rejecting a Justice Department lawsuit filed in November 2017.

AT&T, the No.2 U.S. wireless carrier by subscribers, agreed in June to temporarily manage Time Warner’s Turner networks separately from DirecTV, including setting prices and managing personnel, until February 2019 or the conclusion of the government’s appeal.

The deal was seen as a turning point for a media industry that has been upended by companies like Netflix Inc and Alphabet Inc’s Google which produce content and sell it online directly to consumers, without requiring a pricey cable subscription. Cable, satellite and wireless carriers all see buying content companies as a way to add revenue.

Reporting by Diane Bartz; editing by Jonathan Oatis

Our Standards:The Thomson Reuters Trust Principles.

Source link