AT&T told a federal judge on Tuesday that its proposed merger with Time Warner would not harm its rivals, pledging that it would strike deals with its cable competitors to ensure that the channels it stands to gain — like TBS and CNN — cannot go dark in future fee disputes.
AT&T pledged that CNN and TBS channels won’t go dark on any pay TV services if it’s allowed to buy Time Warner
That’s part of AT&T’s response to the U.S. government’s lawsuit against its proposal to buy Time Warner.
The commitment came as part of AT&T’s first formal legal response to the U.S. government, which sued the company earlier this month in a bid to block the wireless giant’s roughly $85 billion acquisition.
For the Justice Department, a key concern is that AT&T, which also owns DirecTV, could seek to withhold programming from other distributors if it were allowed to buy Time Warner.
The content powerhouse also owns Turner, which houses networks CNN, TBS, TNT and Cartoon Network, and the DOJ fears that AT&T could use that content as leverage to extract higher fees from the likes of Charter, Comcast* or Dish — or threaten them with blackouts.
In its new filing in court, AT&T said that it had already “extended to third-party distributors” a pledge that it would submit disputes over licensing Turner programming to “baseball-style arbitration” for seven years after the deal closes.
In practice, that means a third party would evaluate licensing terms and choose the one with the best “fair market value,” which would have the effect of ensuring that Turner channels do not disappear “on any Turner distributor during the arbitration process,” according to AT&T’s response.
Relinquishing the ability to black out channels is a large concession. Normally, distribution contracts include what are known as “most favored nation” clauses that ensure that each distributor is paying competitive rates with a similarly sized pay TV service. The blackout is a last-ditch negotiating ploy that a programmer can use to seal terms.
The wireless giant said a similar commitment previously had satisfied regulators who reviewed, then approved, another merger: Comcast’s purchase of NBCUniversal. To that end, AT&T contended that the U.S. government had made “an abrupt departure from precedent” in choosing to block its acquisition of Time Warner.
Both companies slammed the U.S. government for lacking proof that the merger would harm competitors and consumers. While the DOJ pointed to AT&T and Time Warner’s own statements, suggesting they might charge distributors higher prices to carry Turner content, AT&T argued that its comments had been misrepresented and lacked context.
* Comcast, through its NBCU arm, is an investor in Vox Media, which owns this website.
This article originally appeared on Recode.net.
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