×
You will be redirected back to your article in seconds

AT&T-Time Warner Trial: Sling TV President Warns of ‘Lose-Lose’ With Merger

UPDATED WASHINGTON — Sling TV president Warren Schlichting testified that the merger of AT&T and Time Warner would mean a “lose-lose for us” and a “win-win for them” because of the combined company’s ability to demand more onerous terms for carriage of Turner networks.

Schlichting’s testimony took up just a fraction of Monday’s proceedings in the antitrust trial, as the Justice Department seeks to block the massive merger. He will again take the stand on Tuesday.

One of the DOJ’s central arguments is that AT&T-Time Warner will have the leverage to demand higher prices for cable networks like TNT, TBS, and CNN that will ultimately be passed on to the consumers.

The DOJ is calling executives from AT&T’s rivals to testify about what it will mean for their businesses if the merger is allowed. Schlichting said AT&T-Time Warner will have less of an incentive to come to an agreement in carriage disputes.

Schlichting previously worked as executive vice president of marketing, programming, and media sales for Dish Network. The satellite provider launched Sling TV in 2015 as an online alternative to pricey pay-TV subscriptions, offering a small lineup of networks that are distributed via the internet at a much lower cost.

He said in his testimony that in previous negotiations for Turner content, both sides were in a “mutual headlock,” where they may be playing hardball in negotiations, but know that they will have to get to a deal. With the merger, he said that is not necessarily the case.

“I just don’t see them having any motivation to move” on their deal demands, he predicted.

He said if there was a blackout, in which Turner networks are pulled from Dish’s carriage, Dish’s satellite service would lose subscribers, and they would migrate to rival DirecTV.

He suggested that Sling TV would be even worse off, because it is easier for subscribers to sign up and cancel their online service that it is for the satellite platform. Some customers would likely migrate to DirecTV Now, an internet “over the top” service that was launched by DirecTV, he said.

Schlichting said the situation would be a “Hobson’s choice” — they could take the onerous terms demanded by AT&T-Time Warner, or face losing the Turner channels altogether.

“If we say no, I just don’t see where it goes from there,” he said. He suggested that if they lose the Turner channels, “you could see our subscriber base, which we’ve managed to build, dissipate quickly.”

He said an issue wasn’t just the price that AT&T-Time Warner would demand, but that it would also force Sling TV to carry more of its network. The Sling TV business model, he said, is based on keeping the channel selection as a “skinny bundle,” not as a replication of the menu of dozens of channels on a basic package of a traditional pay TV service.

Sling TV carries four Turner networks now, but he said he fears being forced to take all eight. Other media companies would then make similar demands. “Once that happens, we break our model,” he said.

Schlichting has yet to face cross-examination, but AT&T-Time Warner’s lead counsel Dan Petrocelli last week grilled a rival from Cox Communications over the threats she said the merger posed to their business. Petrocelli challenged her comments as mere predictions and not based on an actual analysis.

Shortly after the Justice Department filed its lawsuit in November, the Turner networks made an offer to go into “baseball-style” arbitration with distributors if the merger was approved. The offer was designed to assuage concerns that the merger would put rival distributors at a disadvantage.

In his testimony, Schlichting said that such arbitration presented a big risk for Dish, as it puts the decision over a potential carriage deal in the hands of an arbitrator who may not grasp the complexities of the situation.

“It’s an all or nothing proposition, so the risk is really high in my mind,” he said.

Much of the morning was spent in a dispute, after the Justice Department revealed that Schlichting’s attorney from Steptoe & Johnson, representing Sling TV, had received a trial transcript of proceedings last week and shared them with his client.

Judge Richard Leon warned that almost all witnesses had to refrain from reading transcripts about the case until after they testified, and warned that he could strike witnesses from the case if they did so in the future. He did not do so in the case of Schlichting.

Popular on Variety

More Politics

  • Elizabeth Warren Taylor Swift

    Elizabeth Warren Backs Taylor Swift in Big Machine Battle, Slams Private Equity Firms

    Taylor Swift’s battle with Big Machine has spilled into the political arena. Democratic presidential candidate Elizabeth Warren retweeted Swift’s Thursday message about her former record label preventing her from performing her old hits at the American Music Awards, adding that Swift is “one of many whose work as been threatened by a private equity firm.” [...]

  • Adam Schiff

    Adam Schiff Slams 'That Charlatan in the White House'

    Adam Schiff was greeted as a hero at the state party convention in Long Beach on Saturday morning, as he urged California Democrats to help defeat “that charlatan in the White House.” Schiff, who chairs the House Intelligence Committee, appeared at the convention after leading the opening week of impeachment hearings against President Trump. He [...]

  • Roger Stone

    Roger Stone, Trump Ally, Found Guilty of Lying to Congress, Witness Tampering

    Roger Stone was found guilty on Friday in his false statements and obstruction trial. He faces up to 20 years in prison. The political operative and long-time confidant of President Donald Trump was convicted by a federal jury in Washington, D.C., of all seven counts against him, including witness tampering and making false statements. After [...]

  • Marie Yovanovitch

    Trump Attacks Former Ukraine Ambassador During Impeachment Testimony

    President Donald Trump lashed out at the former U.S. ambassador to Ukraine as she testified on Friday morning in the House impeachment hearings. Marie Yovanovitch, who was removed from her post in May, testified that foreign policy toward Ukraine had come under the sway of foreign corrupt interests. She said she felt personally threatened by [...]

  • Career Foreign Service officer George Kent,

    TV Ratings: Fox News, ABC Draw Big Impeachment Numbers

    The first day of the impeachment hearings against President Donald Trump drew over 13 million total viewers across the broadcast and news networks combined. Fox News’s coverage from 10 a.m. to 3:30 p.m. drew the highest total viewership of any network, averaging around 2.9 million sets of eyeballs. MSNBC followed in second with 2.7 million [...]

  • Career Foreign Service officer George Kent

    Impeachment Hearings: Bill Taylor Testifies About 'Alarm' Regarding Ukraine Aid

    Bill Taylor, the top U.S. diplomat in Ukraine, testified on Wednesday that he became increasingly alarmed as it became clear that U.S. military aid was conditioned on launching investigations into former Vice President Joe Biden and the 2016 election. Taylor and George Kent, the deputy assistant secretary of state, were the first witnesses called to [...]

  • Patrick Whitesell and Ari Emanuel WME

    Endeavor PAC Goes Quiet as Candidates Reject Corporate Cash

    In February 2017, Hollywood was gripped by a spirit of resistance to the Trump administration. Endeavor bosses Ari Emanuel and Patrick Whitesell pledged to do their part to fight back by organizing a political action committee. The committee, Endeavor Action, took in almost $300,000 in 2017 and 2018, and distributed about half that money to [...]

More From Our Brands

Access exclusive content