AT&T touts Time Warner merger during U.S. Senate hearing

Authors: David Shepardson and Diane Bartz

WASHINGTON (Reuters) – AT&T Inc’s (TN) planned $85.4 billion acquisition of Time Warner Inc (TWX.N) will boost innovation and provide “better pricing options” for consumers upset about high cable TV bills, AT&T Chief Executive Randall told lawmakers Stephenson Wednesday.

“We want consumers to pay once for their content and watch it anywhere, anytime,” he said during a hearing of the Judiciary Committee’s antitrust panel.

Sen. Amy Klobuchar, the panel’s top Democrat, expressed concern that the deal would create an incentive for AT&T to refuse to license Time Warner movies and TV shows to competitors. She also said AT&T may favor its own programming over independent content.

Time Warner owns HBO, CNN, Cartoon Network and the Warner Bros. film studio.

Sen. Al Franken, also a Democrat, expressed the same concern and pressed Time Warner CEO Jeffrey Bewkes on whether the new combined company would raise rates on other entities that broadcast its content. “He would have no motivation or opportunity,” Bewkes replied.

AT&T’s Stephenson agreed: “It wouldn’t make sense… to do that.”

Sen. Mike Lee, the Republican chairman of the antitrust panel, said the review by the U.S. Department of Justice would be “very fact-rich.”

“Consumer welfare is maximized by protecting competition, not necessarily by protecting competitors,” Lee said.

The Department of Justice will determine whether the transaction complies with antitrust law. If the agency decides to stop the proposed transaction, it must convince a judge to agree to it.

Stephen said the Federal Communications Commission would also review the deal if AT&T decides to acquire any of Time Warner’s licenses.

Franken said he wants the FCC to review the merger because of the tougher standards.

Senator Richard Blumenthal expressed “serious concerns about this transaction. I’m not yet convinced that the benefits outweigh the risks.”

But he was also concerned that President-elect Donald Trump, whose administration will decide whether to approve the merger, had said during the campaign that it should be blocked.

“What concerns me is that the president-elect has said that his Department of Justice will enforce different standards of law depending” on whether he is “angered by news reports,” Blumenthal said, calling the notion “completely repugnant.”

Stephenson said he has not contacted Trump’s transition team about the matter and expects the Justice Department to give a fair review of the merger.

Billionaire investor Mark Cuban told a Senate panel that the merger would create another competitor to large companies such as Apple Inc (AAPL.O), Google (GOOGL.O), Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN. O ) and Facebook Inc (FB.O).

“Delivering content to consumers in an app-driven world is not easy,” he said in written testimony. “On their own, it will be very difficult for either AT&T or Time Warner to compete.”

More changes will come, he said: “There will be people cutting the broadband cable.”