AT&T Targets Claims of DOJ's Star Witness in Time Warner Trial
(Bloomberg) -- A lawyer for AT&T Inc. sparred with the government’s star witness in the U.S. lawsuit to block the takeover of Time Warner Inc., questioning a key prediction that the deal would give it unfair leverage over pay-TV rivals seeking Time Warner’s programming.
Carl Shapiro, University of California at Berkeley professor, testified Wednesday in federal court in Washington that prices would ultimately go up for consumers if the $85 billion merger goes through, with AT&T’s DirecTV benefiting from pressure placed on rival distributors.
On cross-examination, AT&T’s attorney Daniel Petrocelli noted several executives, including Turner Broadcasting’s CEO John Martin, had already testified as government witnesses that they wouldn’t use such leverage. That seemed to undermine one of the Justice Department’s key arguments for blocking the deal.
"They’ve testified they won’t do any of the things you’re saying," Petrocelli said.
Shapiro agreed there’s "strong tension" between his theory and the executives’ statements but said the history of corporate behavior following such mergers backs his case.
"I’m not a mind reader," the professor quipped.
The attorney also balked at Shapiro’s prediction that Charlie Ergen, Dish Network’s chairman known for his tough negotiating skills, would pay an extra $7.5 million a month for the same programming, or $270 million over a hypothetical three-year contract, after the merger.
"Do you have any reason to believe that Mr. Ergen is going to pay almost $300 million in additional monies just because Turner merged?" Petrocelli asked.
"I am not going to get into the head of Mr. Ergen. I’m sure that’s an uncomfortable place to be," Shapiro quipped, eliciting laughter from the courtroom.
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