AT&T And Justice Department Meet In Court Over Potential Time Warner Deal

Mar 22, 2018
Originally published on March 22, 2018 8:47 pm
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AUDIE CORNISH, HOST:

AT&T had big plans to take over Time Warner - that is, until the Trump administration stepped in. Now one of the largest antitrust cases in years is in court with each side giving their opening statements today. The case has major implications for corporations generally and the media industry in particular. NPR media correspondent David Folkenflik has been following this case. Hey there, David.

DAVID FOLKENFLIK, BYLINE: Hey, Audie.

CORNISH: So what led the Department of Justice to take this step?

FOLKENFLIK: Well, the Justice Department lawyers say this is just a matter of too big being too big. AT&T of course is the famous telecommunications company. It offers mobile phones and broadband service. It's got - it owns DirecTV, the satellite TV service. And Time Warner is the owner of HBO, CNN, TNT and a bunch of other stations as well as Warner Brothers Studios. The argument from the Justice Department is that combining all this together provides too much power and influence in one shop. That is the - both the content that's created and the people who provide the content and serve it up to you.

AT&T and Time Warner say in response, look; we're not competitors. We don't really overlap in our businesses. It's not a problem for consumers. And what's more, we have to compete with these huge guys over at Netflix and Apple and Amazon that are preparing to spend billions of dollars a year in creating content. Little old Time Warner can hardly keep up.

CORNISH: And President Trump has been very public about his dislike of CNN, which is owned by Time Warner. He's complained about this deal going far back as 2016 - right? - when he was on the campaign trail. Could any of those comments play a role in the trial?

FOLKENFLIK: Well, lawyers for AT&T sure wanted it to do so. They had tried to effectively subpoena emails between White House officials and Justice Department officials to see if what, if any, role the president's own statements and political leanings on this issue had played in influencing Justice officials to file this civil lawsuit in federal court down there in D.C. The judge in this case said, you know what? We're going to decide this case on its own merits. We're not going to allow that evidence into court. You decided without the question of the president's opinions, even though of course that sets the understanding for how the public thinks about this case.

CORNISH: What are the implications beyond AT&T and Time Warner?

FOLKENFLIK: I think there's going to be a real question if this deal is denied about future major corporate mergers and takeovers. If you think about more closely related companies - Disney and 21st Century Fox, which inhabit a lot of the same space in media and entertainment - Disney is - has made a bid accepted by Rupert Murdoch and 21st Century Fox to take over most of Murdoch's television and entertainment world. Well, if the Justice Department opposes AT&T and Time Warner's merger, it would certainly almost have to do so in the Disney case. And I'm sure there are a lot of other industries and a lot of fields which are watching this very closely for just that reason.

CORNISH: Meanwhile, for consumers, for those of us who care about content or cable (laughter), whether they're packaged, what does this mean for us?

FOLKENFLIK: Well, the Justice Department says, hey, this will cost consumers close to a half billion dollars a year by its expert witness. AT&T's lawyers counter, look; that would work out to about 45 cents a household a month. They'll hardly notice it. I don't know why we should spend $6 a year extra for AT&T, but nonetheless not that big a deal. I think the real question in some ways will be this question of consolidation, of how you get stuff and who is providing it to you. And if it's all under the same roof, are you going to have the same freedom in what you choose and how you get it? Are you going to be getting the same kind of content some years from now? And I think that question is going to be determined as we look not only at these tech giants but at some of these entertainment giants like Time Warner, like Disney seeking to keep pace.

CORNISH: That's NPR's David Folkenflik. David, thank you.

FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.