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Decision of the US Arbitrator on a compromise with AT & T-Time Warner

WASHINGTON (Reuters) – The judge who decides whether to buy AT & T's film and television show maker Time Warner announced Monday that he could consider making a decision that would make the 85th Billions of dollars are not approved or blocked deal.

FILE PHOTO: A composite photograph showing the Time Warner share price on the New York Stock Exchange and the AT & T logo in New York, NY, USA on November 1
5, 2017 and October 23, 2016, respectively. REUTERS / Lucas Jackson (L) and REUTERS / Stephanie Keith / Archive Photos

In his closing remarks, Attorney General of the US Department of Justice Craig Conrath asked to stop the proposed transaction. "Consumers are going to get worse and that's why this merger should be blocked," he said. In the absence of blockade, Conrath urged the judge to consider a sale or sale of assets.

Judge Richard Leon inquired about the possibility of remedying, for example, that business could continue if companies sell a specific asset. Conrath said that if the judge found the deal anticompetitive, he could impose a solution or a remedy.

In his summary, Daniel Petrocelli, who spoke for AT & T and Time Warner, argued against any decision that, for example, would require AT & T to sell DirecTV with more than 20 million subscribers to buy Time Warner. "It's an effort to kill the deal," he said.

Leon said he would probably make a decision on June 12th.

AT & T Chief Executive Officer Randall Stephenson (L) is leaving the scene with David McAtee (C), SEVP and General Counsel for AT & T and Daniel Petrocelli (R), adviser to O & # 39; Melveny & Myers LLP REUTERS / Shannon Stapleton

The judge's decision will lead Dealmaker to show how aggressive they can be with "vertical mergers", where one company is another in one the same industry, but at a different point in the supply chain. Regulators approve the vast majority of vertical transactions.

"Lack of evidence"

In his concluding remarks, Petrocelli argued that the government had failed to prove that the merger was illegal because it had not demonstrated that this would lead to higher prices.

FILE PHOTO: A Time Warner logo is seen on October 23, 2016 in a Time Warner store in New York City. REUTERS / Stephanie Keith / archive photo

"We have a complete proof error," he said at one point. He argued that the deal would cost half a billion dollars a year in price cuts for pay-TV subscribers.

He also criticized a report by economist Carl Shapiro, who testified that the deal would cost consumers more money because AT & T would have the incentive to time-watch content such as CNN or March Madness basketball from pay-TV rivals Both expensive cable networks, withholding and cheaper online startups.

And Petrocelli argued that an AT & T arbitration bid would take away much of the price increase power. Hoping to avoid litigation, AT & T suggested that they settle disputes with distributors for seven years on pricing for Time Warner networks and promise not to dampen programming during arbitration.

In his last argument, the Justice Department Confrath told the court that AT & T boss Randall Stephenson, who said it was "absurd" to withhold content from competitors, also emailed Time Warner CEO Jeff Bewkes, after Time Warner joined Hulu, a cheaper online competitor.

"It's hard to imagine how that will not affect all our relationships," Conrath Stephenson quoted as a writer.

Regarding DirecTV, Conrath said AT & T wanted to preserve this "cash cow" as long as possible. DirecTV lost 187,000 traditional US video customers in the first quarter of 2018.

Two key witnesses to the trial were Stephenson and Bewkes, who retire when the transaction passes. Both were present for the final arguments, and Stephenson shook Petrocelli's hand during a break after his summary.

The two executives argued in the study that AT & T's alleged disclosure to customers of Time Warner's ability to produce compelling video would allow the merged entity to more effectively promote and give it a chance with titans like Facebook Inc and Alphabet Inc. Google.

Reporting by Diane Bartz, Editing by Franklin Paul and Rosalba O'Brien

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