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The head of Time Warner's most profitable unit didn’t mince words on Tuesday when asked what he thinks about the U.S. government’s efforts to block AT&T’s $85 billion acquisition of Time Warner.
John Martin, chief executive of Turner Broadcasting, described the Justice Department as "clueless.”
"If you're the government and you are worried about fixing the competitive landscape, what are you worrying about?” Martin said. “It's a massive misallocation of resources and capital to fight this thing. They are going to lose."
Martin, who was once chief financial officer at Time Warner, was unusually outspoken for a corporate executive with a pending acquisition ahead. He was interviewed by CNBC reporter Julia Boorstin as part of Recode’s Code Media conference in Huntington Beach, California.
Martin's criticism was not reserved for the Justice Department. He also offered a blunt assessment of satellite TV service DirecTV, which is owned by AT&T.
"I have DirecTV. I live in Beverly Hills,” he said. “It's not that good."
Martin also criticized DirecTV’s streaming TV service, DirecTV Now.
"They had this little business DirecTV Now that they make no money on,” he said. “If you're in a business where you make no money on subscribers, that's not a good business."
Martin’s comments come a little more than a month before AT&T and Time Warner are scheduled to meet the Justice Department in court on March 19. The Justice Department has argued that the acquisition could push up prices for consumers and create an anti-competitive playing field in pay TV.
Turner, which houses CNN, is one of the bigger parts of the deal — and one of the most controversial. The Justice Department pushed AT&T to divest parts of Time Warner, a notion that Time Warner has rejected.
Martin’s comments underscore the two companies’ argument that its deal is not anticompetitive due to the emergence of tech giants such as Netflix and Amazon.
Since the deal was announced in October 2016, Netflix has added six million subscribers compared to no growth for AT&T during the same time period, Martin said.
"Amazon and Google have, essentially, in terms of market cap... have added the equivalent of AT&T, and Facebook has added the equivalent of two times Time Warner,” he said.
Since the announcement of the deal, DirecTV has lost 1.3 million subscribers, Martin said.
AT&T is acquiring Time Warner because it wants to offer its customers more reasons to subscribe to its mobile phone service. The company also believes it can make money by delivering more targeted advertising by marrying mobile data with information about what people are watching on TV.
Competitors fear that if AT&T owns Time Warner, it could use Time Warner's TV services such as HBO as a weapon by, for instance, making HBO available at a cut rate to its own subscribers, rendering rivals a poor option.
The Justice Department has argued that AT&T should respond to its concerns by divesting part of its assets such as DirecTV or Turner. AT&T chief executive Randall Stephenson has said the company will not sell CNN.