WASHINGTON—The chiefs of AT&T Inc. T -0.51% and Time Warner Inc. TWX -0.05% will take the witness stand this week to defend their proposed $85 billion combination, a key moment in a high-stakes court battle with U.S. antitrust enforcers.
Time Warner CEO Jeff Bewkes could testify as soon as Tuesday to explain why the owner of Cartoon Network and HBO wants to sell itself to the country’s biggest pay-TV distributor. AT&T CEO Randall Stephenson will likely have his chance on Thursday, when he takes the stand to dispute the Justice Department’s allegations that the deal would raise the cost of cable- and satellite-TV service.
The prospect of executives stepping off corporate jets and into the witness box could provide a bit of what counts for drama in the federal trial, which began last month but traces back to an antitrust review that started shortly after the companies announced their plans to merge in October 2016.
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Testimony so far in Judge Richard Leon’s packed courtroom has included explanations from industry executives called by the government and from economic experts from each side. The closest scrutiny is on reactions and questions from Judge Leon, who will decide the deal’s fate. (Read the Journal’s complete coverage of the AT&T–Time Warner court action.)
The deal has broad ramifications for the media and technology industries as well as for the government’s power to deter large-scale corporate consolidation. It could also define both executives’ legacies. Neither CEO has testified in an antitrust trial of this kind, though they’re both veterans of corporations known for big acquisitions and shedding operations.
Mr. Bewkes, 65, who has run Time Warner since 2008, put his company on the block in 2016, before TV advertising rates started to slide and cable customers started abandoning traditional TV bundles. Losing the case would force the media executive to play his hand all over again, only with the chips down a bit more.
The case is also personal for Mr. Stephenson, who has led AT&T for more than a decade. The 58-year-old clinched a $49 billion deal for DirecTV in 2015 but dropped a takeover for what is now T-Mobile US Inc. amid government opposition. Now, he’s hitched the company’s future to a deal that would move it further from its telephone roots.
Companies usually call their top executive to the stand when they’re defending a “personal project of the CEO,” said Stephen Calkins, a professor specializing in antitrust and consumer law at Wayne State University. “When it is a really major transaction…it would be surprising to not see the CEO testify.”
Mr. Stephenson, who is also AT&T’s chairman, can also use his time on the stand to show that the buck stops with him. The government has used junior executives’ emails and presentations to argue that the combined company will wield Time Warner’s channels against rivals, hurting overall competition. The defense has said that those employees don’t speak for AT&T.
Both companies argue their deal won’t hurt competition because they aren’t direct rivals. Time Warner provides video entertainment and AT&T, along with its DirecTV unit, distributes it. They estimate that joining forces would save the combined company more than $2.5 billion a year by 2020.
Some topics will likely be out of bounds. Mr. Stephenson has questioned whether President Donald Trump’s dislike for Time Warner channel CNN influenced his Justice Department’s decision to fight the deal. AT&T’s attorneys broached the issue before the trial but Judge Leon ruled they weren’t allowed to make it part of their defense.
Taking the stand isn’t without risks, however. The Justice Department needled Electrolux AB’s chief executive in 2015 over his company’s plans to buy General Electric Co.’s appliance unit. After the companies lost that case, Electrolux let go of its CEO.
There are also downsides to staying silent. Staples Inc. was so confident in the merits of its merger with Office Depot Inc. that the company never mounted a defense against a Federal Trade Commission lawsuit. Staples lost the case, and the CEO, who never testified, retired weeks later.
Testimony in the AT&T case, including rebuttal witnesses, is expected to continue for a few more weeks. Judge Leon’s verdict is expected to come down before the companies’ deal deadline on June 21.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com