AT&T CEO Randall Stephenson today defended his company's proposed acquisition of Time Warner, saying that critics who claim the merger will raise prices are "uninformed." As proof, he said the AT&T-owned DirecTV will soon launch a $35-per-month streaming service called DirecTV Now.

"I'm not surprised [by the criticism]. They're uninformed comments," Stephenson said in response to a question from Wall Street Journal editor Rebecca Blumenstein at the newspaper's WSJDLive Conference. "Anybody who characterizes this as a means to raise prices is ignoring the basic premise of what we're trying to do here, again a $35 product we bring into the market."

Blumenstein had asked specifically about merger criticism from Republican presidential nominee Donald Trump and Democratic vice presidential nominee Tim Kaine, noting that the Department of Justice and Federal Communications Commission have raised concerns about previous "megadeals" and antitrust issues. Sen. Al Franken (D-Minn.) and Sen. Bernie Sanders (I-Vt.) have also claimed the merger will lead to higher prices for US consumers.

Stephenson mentioned the $35 DirecTV Now package several times to make his argument that AT&T and Time Warner won't be raising prices. "This is a way to drive pricing down in the marketplace," Stephenson said.

But he didn't make it clear why buying Time Warner is necessary to offer that streaming package—while its pricing wasn't unveiled until today, AT&T announced plans for DirecTV Now nearly eight months ago. AT&T just finalized its merger agreement with Time Warner three days ago and doesn't actually own Time Warner yet. The merger must undergo regulatory review, with AT&T hoping to complete the acquisition before the end of 2017. Regulators could even block the deal, but AT&T has committed to offering the $35 package long before it finds out whether it can complete the merger.

Still, despite being separate entities, AT&T may already be getting better pricing for Time Warner content thanks to the companies' close relationship.

Stephenson also said that vertical mergers such as AT&T/Time Warner aren't vehicles for changing pricing structures. While a vertical merger joins companies that operate at different levels of an industry's supply chain, a horizontal merger joins companies that make the same goods or services and compete against each other. AT&T buying Time Warner will not change the broadband market, the wireless market or the media market, he said.

AT&T purchased DirecTV last year to become the nation's largest cable or satellite TV provider. Owning Time Warner (which, by the way, is a completely different company from Time Warner Cable) would give AT&T ownership of HBO, CNN, and a lot of other programming.

DirecTV Now: More than 100 channels, no junk

As for the new offering, DirecTV Now will be available over any Internet connection without requiring a DirecTV satellite dish.

Appearing alongside Time Warner CEO Jeffrey Bewkes, Stephenson said the DirecTV Now streaming bundle will include "all of Jeff's content." While Stephenson didn't specifically mention HBO, he said the bundle will include Time Warner properties like TBS and TNT and channels from other companies such as Fox and the Comcast-owned NBC.

Overall, DirecTV Now will have more than 100 "premium" channels, Stephenson said. "This isn't the junk nobody wants," he said. Channels like HBO may cost extra, as AT&T said in its March announcement that DirecTV Now will have a base price "plus premium add-on options." Today, Stephenson said AT&T will experiment with a la carte pricing.

Within three to five years, AT&T wants to make DirecTV Now its primary video platform, reducing or eliminating the need for satellites and in-home TV hookups, according to a recent Bloomberg report.

Today, Stephenson said that future 5G cellular technology will help the AT&T/Time Warner combined company become "a head to head nationwide competitor with the cable ecosystem." Owning Time Warner would help AT&T control some of its own costs for programming. But Stephenson said programming costs will still go up and that AT&T will increase the use of targeted advertising to video customers in order to keep consumer prices down.

Those pesky regulators

Stephenson acknowledged that regulators will likely impose conditions on AT&T's purchase of Time Warner. As we noted in previous stories, owning Time Warner would give AT&T incentive to raise the prices its rivals (such as Comcast, Charter, and Verizon) pay to distribute Time Warner programming on their cable TV systems, which could indirectly raise consumers' TV bills.

AT&T could also harm online video services that compete against DirecTV by charging them higher prices for content or refusing to license videos. AT&T could favor Time Warner video on its own networks by letting it stream without counting against the data caps applied to video services like Netflix. (While DirecTV Now will be available over any Internet connection, it won't count against data caps on AT&T's mobile network if the company follows its past practices.)

Stephenson said that Time Warner will continue to distribute its content "widely and broadly" after the merger without giving exclusive access to AT&T. Time Warner news divisions like CNN will also retain editorial independence, he said.

AT&T has suggested that it might not need FCC approval to complete the merger, though it may end up having to apply for FCC approval of certain license transfers. The Department of Justice will review the merger regardless of whether the FCC has to approve any license transfers.