In AT&T’s fight to purchase Time Warner, the company told a federal judge that it will forge deals that will keep CNN and TBS on other pay TV providers. The government is suing to block the AT&T/Time Warner merger, saying it would be harmful to competition. Some observers say the feds’ opposition is related to President Trump’s neverending feud with CNN.
However, the Justice Department says one of its concerns was that AT&T, which owns DirecTV, could withhold Time Warner’s networks from other providers. Time Warner owns the Turner networks as well as HBO and Cinemax. Justice says AT&T could use them as leverage to get higher fees from the other major companies, or threaten them with blackouts.
But AT&T says it would ensure that there would be no fee disputes or blackouts by submitting them to “baseball-style arbitration” for seven years after the deal closes. For those familiar with arbitration, the two disputing parties would submit their fees and an independent arbiter would choose one.
In addition, AT&T promised not to pull programming while in dispute. As Recode reports, refusing to black out networks is a big deal:
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.
Whether it will work with the judge remains to be seen. AT&T hopes to seal with the deal with Time Warner, but has to clear this legal hurdle. If the judge approves the merger, then AT&T and Time Warner would have control of plenty of sports programming, including boxing, eSports, MLB, NBA, NCAA Tournament, NFL (Sunday Ticket), and the UEFA Champions League (next season).
Any fee disputes will be watched closely if the deal ends up being approved.