AT&T insists Time Warner deal is good for competition

U.S. telco highlights OTTs' expansion into video, extends deal deadline to April 2018

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AT&T has insisted that its proposed Time Warner acquisition is good for competition in the content market because it will help it keep pace with over-the-top (OTT) players.

"Far from lessening competition, the vertical combination of these assets is necessary to allow the combined company to keep pace in an environment where cable is the incumbent market leader and viewer preferences are rapidly tilting towards the direct-to-consumer platforms of Netflix, Google, Amazon Prime, Facebook, Apple, Hulu, and others," AT&T said in a court filing on Tuesday.

AT&T and Time Warner have also agreed to extend the deadline for completing the deal until next year.

It comes after the U.S. Department of Justice (DoJ) filed a lawsuit earlier this month to block the $84.5 billion tie-up on grounds the transaction threatens to harm competition in the content market, leaving consumers with higher bills and less choice.

"Time Warner accounts for a valuable, but exceptionally thin, slice of all the video content available to consumers, and AT&T's legacy video distribution platforms are being squeezed by cable incumbents and tech giants alike," AT&T said.

The telco highlighted the heavy investment in content by Web-based rivals, such as the $17 billion that Netflix has committed to spend over the coming years, and Amazon's $4.5 billion spending spree on content this year alone.

"In only a few years, the way in which Americans watch television has radically and irreversibly changed. While incumbent cable companies continue to lead in the delivery of television programming to homes across the country, massive digital platforms are harnessing the power of vertical integration to bring premium video content directly to consumers' Internet connected televisions, phones, and tablets," AT&T said.

"Against this backdrop, the proposed merger of AT&T and Time Warner is a pro-competitive, pro-consumer response to an intensely competitive and rapidly changing video marketplace," it insisted.

To give themselves more time to fight the DoJ suit, AT&T and Time Warner extended the deadline for closing the deal to 22 April 2018.

In an SEC filing on Tuesday, AT&T reiterated its intention to "vigorously contest the DoJ's allegations and is confident that the court will reject the DoJ's challenge to the merger."