AT&T trial goes deep on carrier negotiations

The third week of the trial between the Justice Department and AT&T-Time Warner kicked off on Monday with government ...

Posted: Apr 3, 2018 11:20 AM
Updated: Apr 3, 2018 11:20 AM

The third week of the trial between the Justice Department and AT&T-Time Warner kicked off on Monday with government lawyers going deep with Turner executives on past negotiations with distributors.

In its bid to block AT&T's $85 billion takeover of Time Warner, the government has argued that the new company would have additional leverage over its distributors, and that the possibility of not having access to Time Warner content could extract higher prices or onerous terms.

The day was filled with testimony from Turner executive Coleman Breland, who was previously in charge of Turner's negotiations with distributors and now serves as the organization's president of content experiences. On the stand for hours, Breland provided testimony that could be construed as helpful to either side.

Breland was the Justice Department's so-called "adverse witness," one whose position runs counter to the side that called him to the stand. He helped counter the government's narrative that Turner, a huge chunk of the Time Warner package sought by AT&T that includes channels like TBS, TNT and CNN, has already used its content to force the hands of its negotiating partners.

During questioning from government attorney Dylan Carson, Breland acknowledged that Turner has at times almost gone dark, also known as a "blackout" -- when a distributor drops access to a channel -- during carriage negotiations. But Breland stressed that blackouts are harmful to his side as well and that Turner never actually wants one.

"You're desperate when you're off the air because you're bleeding money," Breland said. During questioning from Time Warner attorney Kevin Orsini, Breland testified that Turner lost $4.5 million in ad revenue during a 21-day blackout with Cable One in 2013. A month-long blackout in 2014 with the satellite television service Dish cost Turner $30 million, Breland said. Going dark on a top distributor could cost Turner somewhere around $75 million per month, he testified.

But Carson said that Turner has repeatedly emerged as the victor following a blackout. During his direct questioning of the witness, Carson entered into evidence a number of emails between Breland and other Turner and Time Warner executives regarding their negotiations with distributors.

In one instance, Carson said an email showed how Turner was willing to go dark amid negotiations with Time Warner Cable over a single penny per subscriber rate (which can translate into millions of dollars).

The government has employed some variation of that argument throughout its lawsuit to stop a merger that it says will reduce competition, harm consumers and stifle innovation. In opening arguments last month, lead government attorney Craig Conrath asserted that AT&T would "weaponize" Time Warner content -- which includes HBO and the Turner networks.

In emails among Turner executives, Carson pointed to statements about how many subscribers the distributors could lose or were losing as a result of blackouts.

"We generated a downward spiral in terms of subscriber loss," on email said, referring to a 2014 DISH blackout.

Carson also brought up negotiations with newer providers like Sony Vue, YouTube TV, and DISH's internet-streamed television service Sling TV. He argued that Turner has increasing leverage over the newer services because without Turner, these new providers would have trouble taking hold in the market. YouTube TV, Carson noted, did not successfully reach a deal with Turner in 2016 prior to YouTube TV's launch. Last month YouTube TV announced it would start carrying Turner content.

Breland said YouTube was offering to pay some of the lowest prices he had ever seen, as well as split up Turner networks into different tiers.

Later, Breland noted he wants Turner content "to be on every platform that comes" along in the future because "you don't know what will be successful."

Other emails introduced by Carson on Monday showed Turner CEO John Martin, who also took the stand last week as the Justice Department's adverse witness, expressing his desire to use HBO to "maximize leverage" in Turner negotiations.

Carson discussed how Time Warner chairman Jeff Bewkes also sought to align HBO and Turner in negotiations. As a result, HBO was instructed to end talks with YouTube TV due to disagreements during negotiations.

Breland played down the so-called alignment between Turner and HBO, saying it wasn't a mandate from Bewkes and that it was largely motivated by a desire to enhance awareness of what is going on in all parts of the Time Warner empire. HBO, he said, can become a "liability" if it's linked to Turner content in negotiations. The threat of a blackout, he said, creates a sense of "mutually assured destruction."

Breland also echoed AT&T's justification of the merger as a way for the company to keep pace in an industry faced with near-constant upheaval. At one point, he said Netflix has abilities to use their data in advanced ways, while Turner is "making fire with sticks" for advertising information.

"The disruption (in the industry) is like Mount Vesuvius on top of Pompeii," he said.

The trial continues on Tuesday with testimony from Richard Warren, who took over for Breland as head of Turner's content distribution.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 314710

Reported Deaths: 7254
CountyCasesDeaths
DeSoto21646260
Hinds20369416
Harrison17949309
Rankin13643278
Jackson13450246
Madison10113217
Lee9986174
Jones8384163
Forrest7689152
Lauderdale7198240
Lowndes6403148
Lamar623686
Lafayette6203119
Washington5341134
Bolivar4802132
Oktibbeha462998
Panola4596107
Pearl River4519146
Marshall4450103
Warren4393121
Pontotoc420872
Monroe4115133
Union411176
Neshoba4031176
Lincoln3969110
Hancock379586
Leflore3498125
Sunflower336290
Tate334784
Pike3327105
Scott316274
Alcorn313368
Yazoo311770
Itawamba300577
Copiah297465
Coahoma295579
Simpson295388
Tippah288768
Adams286982
Prentiss280060
Marion269380
Leake268473
Wayne262841
Grenada261587
Covington259881
George248148
Newton246862
Winston227581
Tishomingo227067
Jasper221148
Attala214473
Chickasaw208057
Holmes189174
Clay185554
Stone182833
Tallahatchie178941
Clarke178080
Calhoun170932
Yalobusha164638
Smith162534
Walthall134245
Greene130633
Lawrence128724
Montgomery127142
Noxubee126734
Perry126338
Amite123142
Carroll121829
Webster114532
Jefferson Davis107133
Tunica105726
Claiborne102430
Benton100025
Humphreys96733
Kemper95828
Franklin83923
Quitman81116
Choctaw76418
Wilkinson67531
Jefferson65728
Sharkey50217
Issaquena1686
Unassigned00

Alabama Coronavirus Cases

Cases: 539829

Reported Deaths: 11038
CountyCasesDeaths
Jefferson798271529
Mobile41261809
Madison35132506
Tuscaloosa25915455
Shelby25294249
Montgomery24705593
Baldwin21392310
Lee15987172
Calhoun14569319
Morgan14422280
Etowah13918353
Marshall12275225
Houston10641282
Elmore10147206
Limestone10065151
St. Clair9946245
Cullman9761194
Lauderdale9457243
DeKalb8865188
Talladega8339176
Walker7260278
Autauga7001108
Jackson6836112
Blount6771139
Colbert6320135
Coffee5578118
Dale4876113
Russell445138
Chilton4369113
Franklin426282
Covington4138118
Tallapoosa4044153
Escambia394777
Chambers3590123
Dallas3568153
Clarke351461
Marion3137101
Pike311977
Lawrence302698
Winston275773
Bibb264564
Geneva254078
Marengo249665
Pickens234862
Barbour232056
Hale223978
Butler219069
Fayette212662
Henry189643
Cherokee184645
Randolph182442
Monroe178141
Washington167739
Macon161150
Clay157157
Crenshaw153557
Cleburne149641
Lamar143236
Lowndes140553
Wilcox127430
Bullock123242
Conecuh110829
Coosa109228
Perry107826
Sumter104932
Greene92634
Choctaw61024
Out of AL00
Unassigned00
Tupelo
Partly Cloudy
82° wxIcon
Hi: 83° Lo: 56°
Feels Like: 82°
Columbus
Partly Cloudy
80° wxIcon
Hi: 82° Lo: 56°
Feels Like: 80°
Oxford
Mostly Cloudy
79° wxIcon
Hi: 81° Lo: 56°
Feels Like: 80°
Starkville
Partly Cloudy
79° wxIcon
Hi: 81° Lo: 53°
Feels Like: 79°
High pressure will continue to dominate our weather forecast for the end of the weekend. We will see our area filled with plenty of sunshine but clouds will be on the increase into the evening hours. There will be some changes for the start work week in our weather forecast as low pressure brings back some chances for showers and thunderstorms.
WTVA Radar
WTVA Temperatures
WTVA Severe Weather