AT&T picks apart feds’ star witness in merger case
U.S. antitrust enforcers wrapped up their case for why AT&T’s takeover of Time Warner should be blocked, but not before defense lawyers picked apart the findings of the government’s star witness.
Carl Shapiro, an economics professor from the University of California at Berkeley, testified Wednesday in Washington to explain his analysis of how the merger will give AT&T the power to raise costs for Time Warner programming sold to pay-TV companies. Those costs would in turn be passed on to subscribers, he said.
“The merger will likely lead to an increase in fees that Turner is able to charge” that will lead to higher prices for consumers, Shapiro, a former Department of Justice antitrust official, said at the start of his daylong testimony.
That analysis rests on a host of assumptions and ignores some real-world data, according to Daniel Petrocelli, the lead attorney for AT&T and Time Warner who was quick to poke holes in Shapiro’s model. Even a small tweak to the analysis — about how many subscribers would leave a rival pay-TV company in the event of a programming blackout — would show that consumer prices wouldn’t rise following the deal, Petrocelli said.
Petrocelli did a good job exposing weaknesses in Shapiro’s model, according to Jennifer Rie, a legal analyst with Bloomberg Intelligence in New York. Rie said Shapiro’s analysis was probably the most important part of the Justice Department’s case.
“The testimony on cross examination left the impression that the model used was simply an academic experiment that didn’t align with real-life behavior, which was ignored,” she said. “It also looked a bit like the DO J cher-