WASHINGTON (CN) - Building its antitrust case over AT&T’s proposed buyout of Time Warner, government attorneys elicited testimony from one of the cable company’s own executives about benefits of a merger.
Employed by a Time Warner subsidiary, Turner Broadcasting CEO John Martin is the first witness called by the government who is not a competitor opposed to the merger.
He testified this morning that access to AT&T customer data would be a boon to Turner, as declining advertising revenue has been one challenge of the changing TV landscape.
While Turner is a network programmer, viewer data is maintained by distributors like Time Warner and Dish Network.
Martin said distributors refuse to turn over data on viewers to Turner, but that networks need such information to provide optimal programming and advertisements.
To attract viewers who have become more accustomed to advertisement-free content on platforms like Netflix, meanwhile, Martin noted that Turner plans to reduce its advertising.
As advertising revenue declines, Martin emphasized that every advertising minute "must be meaningful.”
"We need to make advertising better," Martin said.
The government claims that Time Warner’s sale to AT&T would give Turner more leverage with distributors in negotiations to carry Turner content, and could give the company the power to raise prices on other pay-TV distributors.
This cost – estimated at $400 million annually – could get passed onto consumers, the Department of Justice has argued.
Government attorneys explored this topic earlier in the week with another witness, Warren Schlichting, the president of Sling TV, an online TV service operated by Dish Network.
Schlichting warned that AT&T and Time Warner’s merger could position Turner to threaten a blackout of its content unless distributors accept onerous terms to carry Turner networks.
Though Schlichting described certain Turner networks like TNT, TBS and CNN as "must haves" for Dish subscribers, attorneys for the merging companies have zeroed in on sports content for their rebuttal.
Turner has a $1 billion deal to carry 64 NBA games per year, and probably spends close to that to carry NCAA tournament basketball games in March, although Martin could not recall the exact figure for that deal.
"I do know at Turner we spend approximately $2 billion annually on sports rights," Martin said.
Defense attorney Daniel Petrocelli with O'Melveny & Myers noted earlier this week that the NCAA tournament games are available online for free, and that other popular sporting events, like the Super Bowl, are broadcast on non-Turner networks unavailable to Dish subscribers.
Martin tried to downplay the significance of the must-have terminology Wednesday.
"Must have is another way of saying popular programming," he said.
But internal memos and emails presented by the government in court show that Martin himself used the terminology frequently in communications with the Time Warner board to prompt approval of the NBA and NCAA deals, noting in one instance that approval of the NBA contract would ensure "high value, must have programming."
Martin’s testimony is expected to continue into Wednesday afternoon.
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