Pay TV channel Starz criticizes AT&T plan to buy Time Warner

[August 03, 2017]   By Diane Bartz

WASHINGTON (Reuters) - The premium movie channel Starz criticized AT&T's  plan to buy Time Warner Inc on Wednesday, saying the megadeal would give AT&T the clout to steer customers away from Starz and toward its own premium channels.

The $85 billion deal, which was announced in October, would give AT&T control of such Time Warner properties as HBO and CNN, the film studio Warner Bros and other coveted media assets.

In a study done for Starz, a unit of Lions Gate Entertainment Corp <LGFa.N>, economist Jeffrey Eisenach argued that AT&T, if it wins antitrust approval to buy Time Warner, would have the incentive to push customers to HBO rather than Starz and other independent channels. Starz airs shows like "American Gods" and "Outlander."

Eisenach said AT&T could do so by removing marketing support for Starz, making it harder for customers to sign up or by dropping the channel altogether.

The study did not take a position on whether the Justice Department should stop the deal or impose conditions.

AT&T took issue with the study's conclusions that it could steer consumers away from Starz.

"This conclusion doesn't square with the facts. We fully expect the DOJ (Justice Department) to base its analysis on the facts and the law, as it always does, and not the work of HBO's competitors," an AT&T spokesman said in an email statement.

The deal was criticized last year by then-presidential candidate Donald Trump, who accused media companies of being unfair in covering his campaign and said his Justice Department would block it. Eisenach was a member of Trump's transition team.

Democrats have also taken issue with the proposed merger, saying it could harm consumers and content providers.

"We hope regulators carefully scrutinize the major consequences of the proposed deal and act as necessary to maintain the robust competition among premium networks that exists today," Starz said in a statement.

AT&T is the largest U.S. multichannel video programming distributor, or MVPD, a term that describes pay TV that is either satellite, cable or wireline. AT&T has 25.8 percent of U.S. MVPD customers, while Comcast is second at 23.2 percent and Spectrum is third at 17.7 percent, the study said.

(Reporting by Diane Bartz; Editing by Peter Cooney)

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