The $85.4 billion merger between AT&T and Time Warner could end up costing consumers hundreds of millions of dollars in jacked-up fees for cable TV and streaming video, an expert witness said.
Carl Shapiro, an economics professor at the University of California at Berkeley, testified on Wednesday that if AT&T’s merger with Time Warner is approved, the united company could coordinate with Comcast and its NBCUniversal unit to yank content from lower-priced streaming-video companies like Netflix.
Shapiro is expected to be the last witness brought by President Trump’s Justice Department as it seeks to show that the proposed merger is illegal under antitrust law because it would harm customres. The government filed a lawsuit in November and is asking Judge Richard Leon to block the deal.
Following Shapiro, who will likely face cross examination Wednesday afternoon, AT&T’s lawyers are expected to bring in their own economist, Dennis Carlton of the University of Chicago.
Shapiro testified that AT&T’s ownership of DirecTV means that it will likely raise rates for content when it negotiates contracts with other cable and satellite companies, and will be more willing to let contracts lapse so DirecTV could win over irritated subscribers when the rival “goes dark.”
Blackouts mattered, he said. “Even though they don’t happen very much, that’s the key to leverage,” he said.
Shapiro noted that companies tend to function as one entity, rather than parts. “That [NBCU’s strategy] would not be in the combined interest of the company. They would be leaving money on the table,” he said.
The trial, which began in mid-March in the US District Court in Washington, is expected to wrap up this month.