WASHINGTON (Reuters) - The U.S. Justice Department presented evidence on Thursday to show that AT&T (T.N), owner of DirecTV, viewed buying Time Warner (TWX.N) as a way to make viewers stick with their pay TV service instead of moving to cheaper online providers.
The department has sued to block AT&T’s $85.4 billion acquisition of Time Warner, saying the deal could raise prices for pay-TV rivals and subscribers while hampering the development of online video.
In a hearing before U.S. Judge Richard Leon, Justice Department attorney Julie Elmer cited an email and report in which Gregory Manty, a director of corporate strategy for AT&T, indicated that buying Time Warner’s content would allow AT&T to slow the decline of pay TV, which was described as a “cash cow.”
Elmer pushed Manty to agree that the report had been “sanitized,” noting that some phrases were removed by AT&T executives or outside counsel.
“I wouldn’t use the word ‘sanitized,’” Manty said, noting that the powerpoint deck had been used in discussions with Time Warner about potential integration.
Companies are limited by law in what they can discuss publicly before closing a merger. Breaking those rules can cause companies to face accusations of “gun jumping.”
“It’s highly regulated,” Manty said under cross examination. “That’s why it’s overseen by lawyers.”
The trial, which began in mid-March in the U.S. District Court in Washington, is expected to wrap up this month.
Reporting by Diane Bartz; Editing by Richard Chang