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AT&T-Time Warner Trial: DOJ Grills Executive on Comment About Pay TV ‘Golden Goose’

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Courtesy of AT&T

WASHINGTON — The AT&T-Time Warner antitrust trial entered its fourth week on Monday as the Justice Department grilled an executive about the extent to which AT&T-owned DirecTV was concerned that the launch of its new streaming service would cannibalize the “golden goose” of its traditional satellite pay service.

But the executive, Devin Merrill, insisted that senior executives at the company threw their support behind the November 2016, launch of DirecTV Now, an internet service that offered a slimmer, cheaper bundle of channels than most of the satellite package offerings. Merrill was the general manager of the new streaming service.

Justice Department attorney Peter Schwingler asked Merrill about an email he wrote to a company research team in April, 2016, in which he talked about making DirecTV Now “as strong as possible without killing the golden goose” of premium satellite subscribers. Merrill acknowledged the email, but said it was not a “specific objective” to launch the new service without harming sales of the satellite service.

Schwinger tried to show that AT&T executives sought to emphasize selling subscriptions to the pay TV satellite service first before using the streaming service as a fallback. But Merrill said they adopted a “needs-based” selling approach, based in part on how a potential customer inquired about a subscription.

He said he considered DirecTV Now a “big success,” with more than one million subscribers. He added that the company launched the service with a promotional offer that included $35 a month for 100 channels, Apple TV for those who prepaid for three months, and an extra $5 for Showtime and HBO.

One of the arguments that the Justice Department is making is that AT&T, in merging with Time Warner, will seek to preserve its traditional pay TV revenue stream at the expense of innovation.

U.S. District Judge Richard Leon closed the proceedings for Monday afternoon as attorneys engaged in a hearing that involved confidential information. The open portion of the trial is scheduled to resume on Tuesday.