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AT&T-Time Warner Trial: Comcast Executive Says ‘No Reason’ to Believe Merger Will Change Leverage

UPDATED WASHINGTON — A top executive at Comcast testified at the AT&T-Time Warner antitrust trial on Thursday that he has “no reason” to believe that the massive merger will have an impact on their company’s negotiations for Turner channels or HBO.

A key argument in the Justice Department’s case is that the merger will give AT&T-Time Warner increased leverage to demand more onerous fees from distribution rivals, ultimately driving up prices for consumers.

But Greg Rigdon, executive vice president of content acquisition for Comcast, was asked by Time Warner’s attorney Kevin Orsini what would change after the merger.

While cautioning that he didn’t know how the company would operate, he said he had “no reason to believe it will impact my negotiations with Turner or HBO.”

A portion of Rigdon’s testimony was being conducted in closed session in the courtroom, with only the judge and the parties present, where he discussed what he was said proprietary information.

Rigdon acknowledged that Comcast agreed to pay more for Turner channels in recent carriage negotiations, but under questioning from the DOJ’s Shobitha Bhat he declined to say in open court whether the rate was greater than inflation.

The Justice Department attempted to enter into evidence analyses Comcast conducted before going into negotiations with Turner and HBO over potential subscriber declines should they lose the channels. But Judge Richard Leon would not to allow the actual figures from the studies.

Comcast, with 20 million subscribers, is the largest cable company in the U.S. and AT&T’s biggest rival for pay-TV customers.

Another argument that the Justice Department has made is that the merger will give two vertically integrated media giants, AT&T-Time Warner and Comcast-NBC Universal, the incentive to work together to restrict access to their content from emerging internet distribution rivals.

Asked if there was any reason to believe that the companies would engage in such collusion, Rigdon said, “No.”

He also said that the use of the term “must have” was used in the industry to connote that some type of programming was “popular.” The Justice Department has been highlighting the use of the term to show that distributors need the Turner networks or face a loss of subscribers.

Earlier in the day, John Hauser, a professor at MIT, presented the results of his survey showing that distributors would suffer a 12.2% subscriber loss in the event of a permanent blackout of the Turner channels and 8.2% after a one-month blackout.

AT&T-Time Warner’s legal team challenged his figures, noting that Dish Network lost about 30,000 subscribers out of 12 million total after the blackout of CNN and other Turner channels. That comes out to 0.25%.

Hauser said that the Dish blackout represented “different situations” than the scenario set out in his survey. “I believe our numbers are accurate,” he said.

Leon asked a series of questions about the survey. He asked him how he could know that those in the survey sample were being honest in their answers, including how they would react if they lost Turner channels because of a blackout.

“Frankly, you have no way of knowing if the answers are what they really believe. They could just whip through it,” Leon said.

Hauser said that the survey tries to filter out those people out. “These are all things we have to worry about,” he said. He also said that the survey uses an approach that is used by marketing executives at Fortune 500 companies.

AT&T-Time Warner has been trying to dismiss the 12.2% figure, and its legal team has noted that it was used by a key economic expert for the DOJ, Carl Shapiro, in his economic modeling in the case. He has yet to testify, but the Justice Department already has cited his conclusions that the merger will lead to $463 million in price increases for customers. AT&T has pointed out that this works out to about 45 cents per user.

 

 

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