Announcer at t officials held a News Conference following the announcement that the Justice Department filed a lawsuit to block a proposed merger between at t and time warner. From new york city, this is when he five minutes. 25 minutes. Good afternoon. My name is larry solomon with at t. We have reporters in the room and more than 500 listening on the webcam. Well have prepared remarks from our speakers then we will open up to questions. Are listening on the conference bridge, press star and one and we will get you in for questions. If youre listening or watching on the webcast, click the submit question that man in the upper righthand side. With us this evening, randall stephenson, chairman and ceo of at t. David mcafee, at t general petrocelli, an partner at malvern he admires and our lead trial counsel for time warner. Thank you. Good evening. Appreciate everybody coming on this short notice. A few points. Obviously, we are surprised to be here. Candidly, im a bit troubled by it. We entered into this detail with really decades of clear legal thisdent demonstrating how merger would ultimately be evaluated. When we announce this deal, the best legal minds in the country agreed this transaction would be approved. Since our company do not even compete with each other. But, here we are. The government has filed a lawsuit and its treacherously very reach of antitrust law beyond the breaking point. All in an effort to stop this combination. This comes at a time when the communications and Media Industries are undergoing some rather radical change. Largescale Internet Companies with market caps in the hundreds of billions of dollars are creating tons of original content and distributing it directly to the consumer. Bothis disrupting industries. Media as well as Communications Industry and it is being done at a level and pays most of us could not even have conceived of five years ago. For example, netflix distributes their content to over 100 million customers. Amazon distributes its content to its prime members estimated an excess of 60 million. Google and facebook reach and distribute content to literally onions of customers. Billions of customers. The government contends that at t, with 25 Million Television companies and turner come with a singledigit share of all media watched, will have unlawful market power. This defies logic. It is unprecedented. I have done a lot of deals in my career. I have never done one where we disagreed with the department of justice so much on even the most basic of facts. Despite our disagreements, we have offered concrete and substantial solutions and as we head to court we will continue to offer solutions that will allow this transaction to close. Noisenot be lost to the that combining these two benefit customers in every day we do not have a is it towe waste bringing the customers. We do not intend to settle out of simple expediency because the rule of law is at issue here. The application of the law is critical in a free market economy. It is equally important for preserving confidence in our government. Covenants that they will fairly adjudicate the matters brought before them. When the government suddenly and without notice or any due process discards decades of legal precedent, businesses large and small are left with no guidepost. Orry Business Combination significant investment become subject to the whim of a regulator as we are seeing here. It tends to be a role of the dice. We have no intention of proposing a solution that is beyond what the rule of law if there are and legitimate concerns, there are plenty of solutions within the president without as well as within the guidelines. We will continue to propose those solutions to the government. If i had this over to the legal teams i want to address the elephant in the room. There has been a lot of reporting and speculation whether this is all about cnn. Friendly, i do not know. But nobody should be surprised that the westin keeps coming up because we have witnessed such an abrupt change in the application of antitrust law here. The bottom line is, we cannot and we will not be party to any agreement that would even give the perception of compromising the First Amendment protections of the press. So any agreement the results and is forfeiting control of cnn, whether directly or indirectly, is a nonstarter. We believe quite strongly that any domestic chair of at t isets or time warner assets not required by the law. We have no intention of backing down from the governments lawsuit. We are in this to win. As a reasonable compromise that principles,late our we intend to do just that. Two underscore rentals point on the rule of law i should thess that the last Time Department of justice actually tried a vertical merger case was in the Carter Administration and at last that case. Before that, you have to go back to the next and administration to find the last time a court has blocked a vertical merger. In the nearly 50 years since then, mergers like ours have been approved again and again because they benefit consumers without removing any competitors from the marketplace. That is the legal precedent upon which the parties rely. We see no reason for this deal differently. Any for more on the doj lawsuit in particular, i turned it over to our counsel. Today sued by the department this mergero block represents a serious and very troubling departure from decades of legal precedent and intake trust guidelines. Antitrust guidelines. The good news is in our system of justice, the doj does not have the final word. It is the court who will settle this issue, and it will do so based on the facts, the law, and the evidence. In a merger case like this, the doj has the burden of proof. It has to prove that this merger will harm competition. It has to prove that this merger will harm consumers. It is a burden that they have not met in a half of a century and it is one that they cannot and will not meet here. Now, just to give you some context. I have been representing both at t and time warner throughout the year j review of this merger. Ransaction over the past year i have personally sat through days and days of sworn testimony i Senior Executives from both companies who have explained to the doj and great detail every aspect of this merger, including how the combined company will be more efficient. How the company will be better mostto compete and importantly, how the combined company will be able to offer exciting new video content and other benefits to consumers. The record of evidence before clearj could not be more and convincing that there is no harm to competition and there is no harm to consumers. That is exactly what you would expect from a merger like this. Because this is a classic vertical merger. The combining of two companies that do not compete with each other. , at tarner owns content content. Es under basic principles of law and economics, combining these , complementaryng companies should pose no antitrust problem. Now, before he was nominated to , the antitrust division himself publicly acknowledged the following. Would you please play the tape . This is what we would call a vertical merger. Content with distribution rather than to competitors merging. I anticipate the fcc will have little if any role and it will be a pure antitrust. It should not be i think, you itw, just the sheer size of and the fact that it is media i think well get a lot of attention, however i do not see this as a major antitrust problem. And he was right. Antitrusto major problem. Problem. No antitrust nothing has changed since mr. Del ray came since he gave those remarks. This merger will not eliminate a single competitor. Up. Tv bill will not go the combined company will not othernn, tnt, hbo, or networks to itself. Theorys the theory and the doj complaint filed about an hour ago simply has no proof and makes no sense in the row Business World and we are confident that the law and the facts will prevail and this merger will be allowed to proceed. With that, we will be glad to take questions. I am drew fitzgerald of the wall street journal. Two questions very quickly, and ive any playing to your arguments and strategy question mark next you want to take that . Look, we know the president has been critical of some of the coverage by cnn but we do not know what was said by whom to home. Those are issues that have a way of sorting themselves out in the course of litigation. That, thisof any of case will be decided on merits by a federal judge and the government will have a burden of proof and as i said, they will have to prove harm. They will not be able to do it and we are confident at the end the day this merger will go forward. Can i just follow up, how much in terms of your defense would you be looking at the potential for white house theussion with doj about perception of cnn . About the criticism of the coverage . How much of that is going to play into what you seek in your discovery phase . For small, to be clear, we do not have to mount a defense in this case. It is the government that has the burden of proof. As i said, it is a burden they have not met and half of a century. They are going to have to come forward with rope of that somehow, despite longstanding principles of law and economics, harmsut this transaction competition, harms consumers. They are not going to be able to do that. In terms of some of these other collateral issues, they have a way of coming out if there im sure will emerge. It probably will not bode well for the government if it does. We are not dependent upon that at all. Anything else . Youan you tell us when first, through this long review process, when did you first get the sense there would be these insurmountable hurdles . Wrecks maybe i should answer that one, dan, if you dont mind. This is a long maybe i should answer that one. This is a long, detailed passes. You do not know if the government is going to file a lawsuit until they do. I would respond with what rendell said previously, we have offered concrete Solutions Rep this process not because we harmful atre is a all, theres no harm whatsoever. But we are pragmatic. If there are solutions we can offer consistent with the law, we will do that. We did that. It will only become as the government decided to file a lawsuit about 30 minutes ago. We have a question from the conference call, from sicilia from the new york times. You. Ank along these lines, can you talk a little bit about randall, you said this is an abrupt change in antitrust law. Were you getting different kinds of signals from the doj before the team . L of to you talk about how things have a way of coming out and also burden of proof is on the doj but will you press for some sort of discovery on communications theeen the white house and doj and the assistant attorney general or is this something do you have a plan for that and other words . The first question is about, when was this an abrupt change . At what moment . I will take that first question and e. On, i will let you take the second half. This investigation has been 13ng on were closing in on months. This is unique to have that investigation go this long. Until recently, with press reports and so forth, it felt like it was headed down a good. And cannot go into details in terms of the negotiations and so forth but as david mentioned earlier, the filing of a lawsuit was kind of the first indication were at an impasse. Lawsuity now that the has been filed we can continue having those discussions and there is a place we can come to to address those concerns. We are. Here dan, do you want to talk about the evidence . And do not have to prove why ake an we do not have to prove why they decided to pursue this case but if it turns out it was pursued by some improper purpose that will obviously not help the doj. Well have to see what develops in the course of the case. Any other questions in the room . Hundreds of millions of dollars for each of your record, if on the the deal went to go through, if you were to win a quarter the case was dropped, can you say 100 that hbo will not cost more or othertition Distributive Services . At t will not have any kind of preferential treatment of the network . Point becauseey what you just alluded to, we believe is your fiction. Think about what the department is alleging. Randall said, alleging somehow the combination of these two companies great an abundance of illegal market power where none existed before. Think about where you live at home, wherever you might live. Think about your video options at home. Your dominant provider is your local cable company. They were the dominant for a long time and still are. Thing. Nd same the dominant broadband company. Your wireless choices, highly competitive. Time warner operates an extremely highly competitive markets. By the concept that somehow the combination of these two things would cause harm rather than to us. Rains credibility but to answer your question, what they are essentially arguing as we would create market power where there was no market power before and that would allow us to charge more to consumers. We believe that is entirely fictional. The evidence also points against this and rational market but on this. When you consider hbo is priced at 14. 99, netflix is 11. 99, amazon gives it to their prime customers at no additional charge. The idea that somehow because at t, aned by inclination to charge higher, is nonsensical. Market dynamics would not even allow for higher pricing even if you were to choose to do that and i think what you have seen by at ts behavior in the past, when we brought but directv, to idea was to bring it mobile platforms and broad distribution platforms and within a year literally of acquiring directv we rolled out a product called directv now at 35 per month. The inclination is you push things to mobile, the price points come down. When you innovate, price points come down. Our objective is to broaden distribution, not limit distribution. Opposite effect on pricing as to what the government is alleging her. . Do want to ask your question will you talk about what you were willing to offer to the Justice Department that they were not willing to accept. You keep talking about how you are willing to make concessions. What are those . We do not comment on negotiations. That is the answer. The point we want to make is, this is an area of law that is very well developed. There are very few areas of antitrust law that are as developed as is. Over the past 40 some years, Different Solutions have been deployed by the different of justice not because they make sense but because the Department Guidelines require them to consider them. Wantis case, the point we to make as we offered those types of solutions. For whatever reason, they were not sufficient here. Next question were going to take from the conference bridge. , washington post. I wonder if you can respond to a portion of the doj critique of this that at ts own criticisms of the conquest comcast deal has the same bed the doj is raising with the at t time warner has the same concerns the doj is raising with the at t time warner merger. This is a deal involving a major big for broadcast network. Sports networks. Dominant positions in local markets in terms of video platforms. Dominant positions in broadband much lessera that was competitive back in 2009, 2 thousand 10, 2011. All of those factors are wildly different and our case. We have much more competition. We want to be a part of it. Time warner content is not a big for network. It does not have that kind of market power that use on comcast , as i explained earlier. With a company do not have that kind of market power in your local markets in terms of distribution. In every way i can imagine it, the picture is different today than it was then. Nbccomcast itin acquiring and what we argued for was the Precise Solutions i argued a minute ago that were established by law. No one argued that deal should be blocked. No one argued for a lawsuit to be filed as one was filed today. What was argued back then was reasonable conditions consistent guidelines. N consistent with the law in consistent with the solutions we offer throughout this proceeding. Our next question is also call. He financial times. Thank you for taking my call. I wondered about sort of the timeline youre saying and how to take. Is going what are the next steps . In, you know, at what point is a become a situation where you need to cut your losses . The doj filed the lawsuit today. They now have the obligation to stand ready for trial. Because we are. Were going to ask the court for the earliest possible date. This is not a case that is going to drag on for months and months and months. We are prepared to go to trial as soon as possible and hopefully that will happen as quickly as 60 days if we have our way with it. The doj would be hardpressed they filed this lawsuit to be telling a court they are not ready to go to trial on this case so we expect them to be we are. Cause as i said in my opening comments, we are going into this to win. In terms of thinking about cutting losses, that is not in our vocabulary. We have a very good case. We feel confident. We intend to win. Our final question, Terry Jeffries from bloomberg. Take thanks for taking our question. Is this doj approach to video content distribution out of concern to make at t less inclined to pursue joint ventures or any kind of future ventures with content companies on mobile . Drugs i would suggest you that this lawsuit has the whole world questioning what they will, can, and cannot do. I would suggest that this lawsuit has the world questioning what they well, can, and cannot do. One of the key concerns about this, to take suddenly without any notice and just upturn 50 years of precedent on eight transaction like this can have nothing but a freezing effect on commerce in general and so i nk that is a sick of again so i think that is significant about this lawsuit that was brought by the department of justice. We appreciate everyone participating. Thank you again. Thank you. Thank you, appreciated. From World Bank President kim jong you can from the World Bank President. Then, it nikki haley on the challenges to freedom and democracy. A Consumer Advocate Organization recently found high lead levels in some fidget spinners. U. S. Public Interest Groups will release their annual report on toys safety on tuesday. Watch live coverage at 9 30 a. M. Easter