Reform among other items. The Senate Budget committee is likely meeting early next week to combine the Senate FinanceCommittee Past tax reform bill and the Senate Energy committee passed provision, the revised bill will go on to the senate floor for debate later in the week. Now, if the bill is approved, house and Senate Negotiators will start working on a compromise tax reform bill. Once negotiators agree on a bill, the new measure will go back to the house and senate for final votes and if approved on to present trumps desk for his signature. Starting today at 130 eastern, we will show key moments of the Senate Finance committees review of the republican tax reform bill, including the exchange between ohio senator orin hatch and democratic pitches to eliminate or replace tax cuts. Recently the Justice Department filed a lawsuit to block at ts merger between them and time warner. Theyve criticized the proposal to by time warner saying he thanks its not good for the country. Up next well hear officials react to the department of justice announcement. It afternoon. My name is larry solomon with at t. Thank you for joining us on short notice. We have reporters in the room. If you are listening, press star and then one. If you are listening or watching on the webcast, click the Submit Button in the upper righthand. With us this evening, the chairman and ceo of at t, david mcafee, at t general counsel, and dan, partner and our lead trial counsel for both at t and time warner. Randall . Thank you and good evening. I appreciate everyone coming on the short notice. What youre going to hear in this moment are some comments from our legal team, but first i want to make a few points. Obviously, we are surprised to be here and candidly, im a bit troubled by it. We entered into this deal with decades of clear legal precedent demonstrating how this merger would ultimately be evaluated. When we announce this deal, the best legal minds in the country agreed this transaction would be approved so that companies dont even compete with each other. But, here we are. The government has filed a lawsuit and it stretches the very reach of antitrust law beyond the breaking breaking point. All of this in an effort to stop this combination. This comes at a time when the communications and Media Industries are undergoing some rather radical change. Massive largescale Internet Companies with market caps in the hundreds of billions of dollars are creating tons of original content and they are distributed. Its going directly to the consumer. This is disrupting both industries and media and its being done at a level and a pace that most of us could not have even 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 in excess of 60 million. Google and facebook reach and distribute content to literally billions of customers, and the government contends that at t, with 25 million tv customers, and turner with a single digit sale of all media watched will have unlawful market power. This defies logic. It is unprecedented. Ive done a lot of deals in my career but ive never done one where weve disagreed so much on even the most basic of facts. Despite our disagreements, weve offered substantial solutions and we continue to offer solutions that will allow this to close. Everyday we spend litigating this deal is a day we are wasting and bringing those benefits to the customer. We do not intend to settle this matter out of expediency. The rule of law is at issue. Consistent in the application of the law is critical in a free market economy. Its equally important for preserving confidence in our government. Confidence that they will fairly adjudicate the matters brought before them. When the government suddenly, and without notice or any due process discards decades of precedent, businesses large and small are left with no guidepost. Every Business Combination or significant investment become subject to the whim of a regulator as we are seeing here, that tends to be the role of the dice. We have no intention of proposing a solution that is beyond what the rule of law would require, and if there are legitimate concerns, there are plenty of solutions within the precedent as well as within the d. O. J. s own guidelines. We will continue to propose those types of solutions to the government. Beforehand the server to the legal team, i do want to address the elephant in the room. There has been a lot of reporting and speculation on whether this is all about cnn. Frankly, i dont know. But nobody should be surprised that the question keeps coming up because weve witnessed such an abrupt change in the application of antitrust law. 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 protection of the press. Any agreement that results in us forfeiting control of cnn, whether directly or indirectly is a nonstarter. We believe quite strongly that any divestiture of at t assets or time warner assets is not required by the law. We have no intention of backing down from the governments lawsuit. We are in to win and asked that a reasonable compromise that doesnt violate our principles. We expect to do just that. Just to}randalls point on the rule of law, i stress that the last time the department of justice actually tried a vertical merger case was in the carter administration. They lost that case. Before that, you have to go back to the Nixon 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 when we entered into this transaction, and under that precedent, we see no reason for this deal to be treated any differently. For more on the d. O. J. Lawsuit in particular, i turn it over to dan, the lead counsel. Thank you david. Todays suit by the department of justice to block this merger represents a serious and very troubling departure from decades of legal precedent and antitrust guidelines. The good news is, in our system of justice, the d. O. J. 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 d. O. J. Has the burden of proof. It has to prove that this merger will harm competition, that this merger will harm consumers. It is a burden they have not met in half a century and its one they cannot and will not meet here. To give you some context, i have been representing both at t and time warner throughout the d. O. J. s review of this merger transaction over the past year. I have personally sat through days and days of sworn testimony by Senior Executives from both companies who have explained to the d. O. J. In great detail every aspect of this merger including how the combined company will be more efficient. Holly will be better able to compete, and most importantly how the combined company will be able to offer exciting new video content and other benefits to consumers. The record of evidence before the d. O. J. Could not be more clear 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, combining of two companies that do not compete with each other. Time warner owns content, at t distributes content under basic principles of law and economics, combining these two noncompeting Complementary Companies should pose no antitrust problem. Before he was nominated to lead the antitrust division, he himself publicly acknowledged the following. Could you please play the tape . This is more of what we would call a vertical merger. A content with distribution rather than to competitors merging. I anticipate that the sec will have little if any role and will be. Antitrust. It shouldnt just be the sheer size of it and its media. I think well get a lot of attention, however, i dont see this as a major antitrust problem. He was right. There is no major antitrust problem. There is no antitrust problem, and nothing has changed since mr. Della came gave those remarks. This will not eliminate a single competitor, the tv bill will not go up, and the combined company will not keep cnn, tnt, hbo or any other network to itself. Simply put, the theories in the d. O. J. Complaint filed about an hour ago simply have no proof and make no sense in the real business world. We are confident the law and the facts will prevail in this merger will be allowed to proceed. With that we would be glad to take questions. I am drew fitzgerald of the wall street journal. Two questions very quickly. Do you have any. How does this plant your arguments and strategy. You want to take that. Yes. Look, we knew the president was critical of some of the coverage by cnn, but we dont know what was said by whom too. Those are issues that have a way of sorting themselves out in the course of litigation, regardless of any of that, this case will be decided on the merits by a federal judge and the government will have a burden of proof. As i said they will have to prove harm. They wont be able to do it and we are confident at the end of the day this merger will go forward. My followup, how much in terms of your defense would you be looking at the potential for white house discussion with d. O. J. About the perception of cnn and the criticism of the coverage. How much of that is going to play into what you seek in your discovery phase . First of all, it will be clear, we dont have to mount a defense in this case. It is the government who has the burden of proof, and as i said its a burden they havent met in a halfcentury. They are going to have to come forward with real proof that somehow, despite longstanding principles of law and economics, somehow this transaction harms competition, harms consumers. They wont be able to do it. In terms of some of these other collateral issues, they have a way of coming out. If theres any proof im sure it will emerge and it probably wont load well for the government if it does. We are not dependent on that at all. Anything else . Can you tell us when you first, through this long review process, when did you first get the sense there was going to be these insurmountable hurdles . Mediation answer that one if you dont mind. Listen, this is a long process. Its a detailed process. You never know when the government will file a lawsuit until they actually file a lawsuit. What i would stress, in response that question is what randall said which is we have offered concrete Solutions Throughout this process, not because we believe theres any harm at all, in fact, to the contrary. We believe very strongly there is no harm whatsoever, but we are pragmatic. If there are solutions we can offer consistent with the law, we are here to do that. We did that. We only became insurmountable when the department of justice decided to file a lawsuit about 30 minutes go. Questions from the Conference Call from cecelia king with the new york times. Thank you. Along those lines, can you talk a little bit about, randall you said this is an antitrust law. Read getting different kinds of signals from the d. O. J. Before the arrival of him to the d. O. J. . Also, my question, when you were talking about how things have a way of coming out and, of course the burden of proof is on the d. O. J. , but when you press for some sort of discovery and medications between the white house and the d. O. J. And the assistant attorney general, or is this something, do you have a plan for that . The first question is about when was this an abrupt change and at what moment . I will take that first question. Dan i will take the second, let you take the second half. This has been going on, we are closing in on 13 months. This is very unique to have an investigation go this long. Until recently with press reports and so forth, it felt like it was headed down a good path. I cant go into details in terms of negotiations, but as david mentioned earlier, the defininfiling of the lawsuit was the first indication we were at an impasse. Hopefully we continue having discussions and see if theres a place where we can come to a conclusion that would address their concerns to the extent that there are legitimate concerns. We are where we are. Dan, do you want to talk about the evidence. Yes. To reiterate. We do not have to defend why they decided to pursue this case, but if evidence does emerge that it was pursued for some improper purpose, that will not help the d. O. J. And so, we will just have to see what develops in the course of the case. Any other questions in the room . [inaudible] if the deal were to go through and you were to win in court, can you say one 100 the hbo will not cost more than your competition . At t wont have any kind of preferential treatment of the network customer. This is a key point because what you just alluded to, we believe is perfection. Think about what the department is alleging. As randall said, alleging that somehow the combination of these two companies create an abundance of illegal market power where it has not existed before. Think about where you live at home, wherever you might live and think about your video options at home. Your dominant provider is your cable company. They were the monopolist for so long and is still the dominant provider in terms of video. Broadband, same thing. Your wireless choices, all highly competitive. The content layer, tom warner operates in a highly competitive market. The concept that somehow the combination of these two things would cause harm rather than good strains credibility to us. To answer your question, what they are essentially arguing is that we would create market power where there was none before and that would allow us to charge more to consumers. We believe that is entirely fictional. The evidence also just points against this, just rational market thought on this when you consider hbos priced at 1499, netflix is 1199, amazon gives it to their prime customers at no additional charge, the idea that there is somehow, because hbo is owned by at t, and inclination to price higher, Market Dynamics wouldnt even allow for higher pricing even if you were to choose to do that. I think what you have seen by at ts behavior in the past, when we brought directv, the objective was to move the content to mobile platforms and distribution platforms and its been literally a year of acquiring directv and we rolled out a product called directv now at 35. Month. The inclination is, as you push things to mobile platforms, price points tend to come down. As you innovate you brought in distribution. Our objective with time warner is to take that content and broaden distribution, not to refine and limit distribution deadbolt and have the opposite effect on pricing as opposed to what the government is suggesting. You ask a question . Could you talk about what you were willing to offer to the Justice Department but they were willing to accept . You kept talking about how youre willing to make concessions. What are those. We dont comment on negotiations read the point we want to make is this is an area of law thats very well developed. There are very few areas of antitrust law that are as welldeveloped as this one. Over the years, over the past 40 some years, Different Solutions have been employed by the department of justice, not just because they make sense, but because the departments guidelines require them to consider them. In this case, the point we want to make is we offer those types of solutions. For whatever reason, they were not sufficient here. Okay. The next question we will take from the conference bridge. Ryan from the washington post. Hello. Im wondering if you can respond to the portion of the critique that site at t own criticism of the deal as a bad deal over some of the same concerns that d. O. J. Is raising with the time warner merger. Im happy to answer that. Those are quotes taken out of contacts. Thats remember what the comcast deal was. It in involved a major big for network, strong regional networks, dominant positions in local markets in terms of video platforms. Dominant from positions in broadband, and in an era which is much less developed and much less competitive back in 2009, 2010, 2011, all of those factors are wildly different in our case. Weve got much more competition over the top videos. We want to be a part of it and of course time warners content is not a big for broadcast network. It doesnt have that kind of market power that you saw in comcast. We as a company dont have that kind of market power in your local markets in terms of distribution. So in every way i can imagine it, the picture is different today than it was then. Having said that, what we argued was directv, prior to at t acquiring it, and what we argued for the Precise Solutions i was just explaining a minute ago that are established by law. No one argued, at least on behalf of directv that that deal should be blocked. No one argued for a lawsuit to be filed as one was filed today. Instead what was argued back then was reasonable conditions consistent with the vision, guideline and law and consistent with the solutions that we offered throughout this proceeding. Our next question is also from the call. Shannon bonds with the financial times. Hi, thank you for taking the call. I was just wondering about the timeline you are seeing. What you expect. How long is this going to take . What are the next steps, and, at what point does it become a situation where you feel you need to cut your losses . The d. O. J. Filed the lawsuit today, and they now have the obligation to stand ready for trial. We are ready and we are going to ask the court for the earliest possible date. This is not a case that will drag on for months and months. This is a case where we are prepared to go to trial as soon as possible and hopefully that will happen as quickly as 60 days. The d. O. J. Would be hardpressed to be telling the court that they are not ready to go to trial on this case. We expect them to be ready, because we are. As i said in opening comments, we are going into this to win. In terms of thinking about cutting losses, thats not in our vocabulary. We have a very good case and we feel very confident and we intend to win. Our final question will be for Terry Jeffries from bloomberg. Thank you for taking our questions. Does this d. O. J. Approach to video content distribution make at t less inclined to pursue joint ventures or any kind of future ventures with content companies on mobile . This throws a huge degree of uncertainty to anybody contemplating joint ventures, anyone contemplating mna. Thats one of the concerns about this, to take suddenly, without any notice, and to just off turn 50 years of precedent on a transaction like this can have nothing but a freezing effect on commerce in general. I think that is a significant of this lawsuit has been brought by the department of justice. With that, again we appreciate everybody participating and joining us and think you again. Today, starting at 130 eastern, we will show key moments of the Senate Finance review of the republican tax reform plan including the exchange and a look at democratic pitches to eliminate or replace tax cuts. The student can documentary competition is underway and students are busy sharing with us through twitter. It is not too late to enter. Our deadline is january 18, 2018. We are asking students to choose a provision of the u. S. Constitution and create a video illustrating why it is important to you. Our competition is open to all middle school and high school students. For grades six through 12. 100,000 in cash prizes will be awarded. The grand prize of 5000 will go to the student or team with the best overall entry. For more information, go to our website student can. Com. Former u. S. Treasury secretary Larry Summers who served in the clinton and Obama Administration talked about the republican tax reform plan during the wall street journal annual ceo Council Meeting here in washington. He also talked about the Trump Administration trade policy. His remarks are about 30 minutes. Thank you larry. Were going to start off with the question, like in the other sessions. Can you please put the question up on the smart phone . We will ask you what you think Economic Growth will be over the balance of this and the