Closing Arguments Heard In DOJ's Lawsuit To Block Potential AT&T, Time Warner Deal
MARY LOUISE KELLY, HOST:
Today both sides made closing arguments in one of the most watched antitrust cases in decades. AT&T is trying to buy Time Warner - the price tag, about $85 billion. The Justice Department has sued to prevent the deal from going forward. Wall Street Journal telecom reporter Drew Fitzgerald has been covering the six-week trial. He was in the courthouse today for closing arguments. And he's in our studio now. Thanks for coming in.
DREW FITZGERALD: Thanks for having me.
KELLY: Briefly lay out the main argument on each side here.
FITZGERALD: Well, this is an unusual type of deal. It's the first time that a telecom company this big, with millions of cellphone customers - also the biggest pay-TV provider with DirecTV in the country - is trying to actually buy the company that has a lot of programming, which includes Turner. That's CNN, TNT, CBS, HBO.
FITZGERALD: So this is kind of unprecedented. And what's at stake is future deals of this kind. So the government says by combining - by joining forces, basically AT&T and DirecTV will use these channels to disadvantage other satellite and cable providers - Comcast, Dish.
KELLY: Choke off competition.
FITZGERALD: Right, and that would raise prices. And the companies say that there's no basis to that. They've called the argument ridiculous. And they are poking at mostly the economic model that the government has used to make that argument.
KELLY: And one of the things that's been unusual in this case is the Justice Department suing to block a merger that is not between direct competitors. I mean, AT&T, Time Warner, as you just laid out, they're not in direct competition.
FITZGERALD: That's right. That's not unprecedented, but it is unusual. So there's a lot of attention on this case, again, because of what it could do if the deal were to go through. It would kind of open the floodgates to a lot of other media companies and telecom companies buying each other. Technology companies could go into the pay-TV business and try to pick up assets.
KELLY: All right, so that is what is at stake for the players who were in court today. What about for us? What about for consumers? What do we stand to gain or lose depending on how this plays out?
FITZGERALD: Yeah, well, it's hard to say because this is an unusual deal. But, you know, from day one, if you're an AT&T customer or an DirecTV customer, you're going to see a lot of branding, a lot of tie-ins. We've actually already seen that over the past year and a half since the companies announced this deal. But AT&T's argument is that they would offer new products. So you might have some sort of skinny bundle that you can watch just a small number of channels for less than your average cable bill. That would be one example. But, again, you'd also see most likely other cable companies, other technology companies trying to do the same thing and follow suit.
KELLY: And meanwhile, we're already watching consequences play out for the companies involved. You've written, for example, even if the judge decides in AT&T's favor, this has already cost the company a lot of money - both the trial and delay of the merger.
FITZGERALD: Well, yeah. I mean, it's objectively a lot of money. The courtroom has for six weeks now been filled with lots of lawyers and, you know, representatives of both companies. But that's because they have, again, about $85 billion at stake. And the CEO of AT&T has kind of bet his vision for the company on this deal.
KELLY: Real quick - when might we expect a ruling?
FITZGERALD: Well, the judge just said - he has kind of a flair for the dramatic. He said that there will be a hearing set for June 12.
KELLY: June 12.
FITZGERALD: And he'll announce it then.
KELLY: All right. That is Wall Street Journal telecom reporter Drew Fitzgerald. Thanks so much.
FITZGERALD: Thank you. Transcript provided by NPR, Copyright NPR.