Witness: AT&T-Time Warner Merger Could Cost Customers Millions

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.

The NY Post reports 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.

Carl Shapiro

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 consumers. The government filed a lawsuit in November and is asking Judge Richard Leon to block the deal.

According to Bloomberg, U.S. District Judge Richard Leon interrupted the Justice Department's questioning to point out that Shapiro's analysis depends on the assumption that AT&T will direct Time Warner's negotiations with pay-TV distributors.

Shapiro said it would be in AT&T's interest to use this added leverage in negotiations. But the judge pointed to earlier statements in the trial about how NBC Universal conducts its negotiations independent from parent Comcast Corp. NBC Universal is maximizing its own profits, the judge said.

"If you accept that," Shapiro said, "this bargaining leverage wouldn't come into play."

Shapiro testified that the added leverage AT&T would gain from the $85 billion Time Warner deal would have amounted to $436 million in higher costs for consumers in 2017 and reach $571 million by 2021.

"The merger will in fact harm consumers, and the harm will be significant," Shapiro said.