WASHINGTON (CN) – A high level NBCUniversal executive testified Tuesday that the impact of negotiations with TV content distributors on its sister company, Comcast Corp., is never a consideration when trying to reach a deal.
The testimony from Madison Bond, chairman of content distribution at NBCUniversal, came during the fourth week of the AT&T-Time Warner antitrust trial and cuts into a key argument the government is making to block the $85 billion merger.
The Department of Justice says AT&T could abuse ownership of Time Warner content, using it as leverage to spike prices or blackout popular “must-have” networks – such as CNN, TBS and TNT – from AT&T’s competitors, thereby driving up costs for consumers.
Executives from AT&T’s rivals – including Dish and Charter – have testified that the merger could cause content blackouts, threatening their ability to offer “must-have” content to their subscribers.
But Bond, who formerly worked for Comcast Cable and joined NBCUniversal after its 2011 merger with Comcast Corp., said on the witness stand that he never thinks about whether a deal will affect Comcast.
During negotiations with virtual multichannel video programming distributors that offer live streaming of channels, for example, Bond says he never considers whether Comcast will lose subscribers if a deal is reached.
Bond also said no executive has ever come to him and asked him not to make such deals because they might hurt Comcast, or to pursue different deals that would help Comcast.
Bond’s top priority during negotiations is doing what’s best for NBCUniversal, he said.
NBCUniversal’s merger with Comcast was vertical, which means that the two companies were in the same industry but at different stages of the production process, rather than direct competitors joining forces, as happens in a horizontal merger.
Like the NBCUniversal-Comcast merger, the AT&T-Time Warner merger will also be vertical. While anti-competitive concerns also emerged before the NBCUniversal-Comcast merger, the Department of Justice did not sue to block it.
The companies did, however, enter a consent decree to address anti-competitive concerns with Comcast promising not to withhold NBC content from rivals. That consent decree expires in September, Bond said Tuesday.
After Bond’s testimony, the court held a closed session for Department of Justice attorneys to conduct direct examination privately. Bond indicated during the open portion of direct examination that emails the government wanted to question him about contained confidential information he could not discuss in an open setting.
Those emails were written by Bond and sent to Comcast CEO Stephen Burke, reportedly updating him on the status of negotiation terms and renewal agreements with distributors.
Bond said it’s not usual for him to discuss NBCUniversal negotiations with Comcast, but that it does happen sometimes.
Bond’s emails to Burke will be entered as exhibits under seal, which means the public won’t be able to access their content. Because much of the evidence in the case is confidential company information, U.S. District Judge Richard Leon has closed the courtroom to the public regularly.
While the Department of Justice has focused heavily on the impact to must-have programming among AT&T’s rivals in its lawsuit to block the merger, the deposition of Randy Sejen, the former chief contract negotiator for Cable One Inc., undercut the importance of such programming.
In his absence, attorneys presented his deposition testimony Tuesday afternoon.
Executives from AT&T’s rivals have said that content blackouts would be devastating, but Sejen said that a 30-day Turner blackout did not significantly impact Cable One.
“There was no seismic shift in subscriber loss during the month that Turner was off,” Sejen said.
In Sejen’s view, only Turner’s sports content – and specifically the NCAA March Madness basketball tournament – is irreplaceable.
Sejen said Cable One communicated constantly with its subscribers during the blackout, which happened in October, 2013 during the Major League Baseball playoffs. Sejen said no popular teams were playing in the Cable One market, but that the company directed subscribers to watch the games online as an alternative.
However, Sejen said Cable One never seriously considered permanently dropping Turner because of March Madness, noting that a blackout during the tournament might have had a different impact on subscribers. Sejen said he could “potentially” point subscribers to watch the tournament online during a March Madness blackout, but noted that solution is only viable when the games are free to watch.