AT&T is fighting back against the Trump administration's attempt to block its proposed purchase of Time Warner Inc. One week after the Department of Justice (DOJ) sued to block the deal, AT&T filed its first answer to the lawsuit yesterday.

AT&T denies the DOJ's allegations that a combined AT&T and Time Warner would raise prices on consumers, attempt to impede competition from online video distributors, and raise prices on rivals that pay for access to Time Warner programming.

Instead, AT&T says that the merger will benefit consumers without harming rivals. The merger "presents absolutely no risk of harm to competition or consumers," AT&T wrote. The DOJ has also failed to establish that AT&T and Time Warner "exercise market power with respect to any relevant market," the filing said. AT&T is just one of many video distributors these days because of the rapid growth of online video services, AT&T said.

AT&T points out that the government previously allowed Comcast to buy NBCUniversal in 2011, with conditions imposed on the merger. "Based on that precedent... AT&T and Time Warner fully expected to resolve the Government’s review of this merger by agreement, rather than litigation," the court filing says.

Using customer data for advertising

The benefits to consumers, according to AT&T, include the use of consumer data in advertising. The filing doesn't say exactly which data that is, but in the past AT&T has analyzed its customers' Web browsing habits in order to serve up targeted ads. When pitching the merger to government officials earlier this year, AT&T said that "more relevant advertising in ad-supported video services” will be one of the main benefits to consumers.

AT&T's new filing said that a combined AT&T/Time Warner will do the following:

develop new ad-supported video models that shift more costs to advertisers and off consumers; use AT&T's consumer data to increase the value of Turner's substantial advertising inventory and create a platform for other programmers to do the same; use the same data to improve Time Warner's decisions as to content investment, marketing and promotions, and scheduling of programming; enable numerous cross-promotional opportunities; and achieve substantial cost savings by integrating various key functions and operations of both companies.

AT&T is the largest pay-TV company in the US, mostly because of its ownership of DirecTV. AT&T is also one of the biggest providers of both mobile and home Internet service. Time Warner is the owner of Warner Bros., HBO, and Turner Broadcasting System. The proposed transaction is valued at $108 billion.

Turner operates CNN, a frequent target of Trump's wrath. AT&T is reportedly looking into whether the White House improperly influenced the DOJ's review of the merger, but this initial response in court doesn't mention Trump.

AT&T summarized its defense as follows:

Simply put, no competitor will be eliminated by this merger. This transaction is therefore a classic vertical deal, combining Time Warner's video content with AT&T's video distribution platforms so that the merged company can compete more effectively against market-leading cable incumbents and insurgent tech giants.

DOJ: “AT&T/DirecTV would hinder its rivals”

But according to the DOJ, the fact that AT&T and Time Warner don't compete against each other wouldn't prevent them from harming consumers and rival companies.

"AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video distribution models that provide greater choice for consumers," the DOJ complaint said last week. "The proposed merger would result in fewer innovative offerings and higher bills for American families."

The DOJ reportedly told AT&T that it could complete the merger either by selling DirecTV or by having Time Warner sell CNN, but AT&T refused.

If the merger is completed, Turner will make some promises designed to prevent video distributors from losing access to Turner content. Video distributors would be able to invoke "baseball-style" arbitration if they can't come to terms with Turner. Turner would also be forbidden "from 'going dark' on any Turner distributor during the arbitration process," AT&T's court response said.

That condition would last for seven years after closing, AT&T said. "Turner has offered this contractual commitment to its distributors as clear proof that, when it is owned by AT&T, Turner will have no greater incentive to increase the price of Turner Networks," AT&T wrote.

AT&T and Time Warner recently extended their merger deadline to April 22, 2018, allowing five months for the lawsuit to play out if the deadline isn't extended again. AT&T announced the deal in October 2016 and previously expected that the deal would close by the end of 2017.