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What We’ve Learned So Far From the AT&T-Time Warner Antitrust Trial

WASHINGTON — The AT&T-Time Warner antitrust trial, which entered its fourth week on Monday, so far has been a proceeding that has unfolded drip by drip, as the government has sought to prove its case with evidence of e-mails, PowerPoint presentations and other documents and the the defense has tried to dismiss their relevance.

There have been few bombshell revelations, with the caveat that a chunk of the trial has been conducted outside of public view.

For much of the afternoon on Monday, for instance, attorneys for the Justice Department and the two companies gathered in a closed courtroom session with U.S. District Judge Richard Leon, apparently to go over some confidential information that will have an impact on the witness list to come.

The government claims that the combined company will have the leverage to demand onerous rates for content from AT&T’s rivals, ultimately driving up the costs for consumers. The Justice Department seems to be depending heavily on sealed and redacted documents, and their efforts to introduce such evidence often is met with objection from AT&T’s side and lengthy sidebar conferences. Leon then pushes a button, and the courtroom is filled with a static-sounding white noise.

With that said, here are some of the highlights of what has unfolded so far:

The Judge Is Weighing In: This is a bench trial, meaning that Leon, and Leon only, will decide the case.

He seems to appreciate courtroom tradition: Each time he enters, his deputy announces, “God save the United States and this honorable court.” He’s easily irritated, and several times has angrily admonished Justice Department attorneys for slip ups on protocol. At others, he shows flashes of deadpan humor in his dislike of slide decks.

He also has been asking a number of questions of witnesses themselves, perhaps most significantly last week, when he seemed to broach the idea of a remedy to the merger. He asked a Charter Communications executive whether he’d favor a “mutually fair” arbitration option for AT&T’s rivals, as a way to soothe concerns that the combined company would have too much leverage in the marketplace.

It’s a bit risky to read too much in to the judge’s queries, but he has earlier seemed to express some surprise at the nature of the cable bundle — i.e. that distributors are forced to take less popular channels as a way to get the most prized ones — and over the $2 billion cost of NCAA rights. He also has asked two government expert witnesses an extended series of questions about the reliability of consumer survey data, which the government has used to bolster its case.

The DOJ Is Going Heavy on Adverse Witnesses: The government has been calling a number of AT&T and Turner executives as “adverse” witnesses — meaning that they are taking the stand even though they side with the defendants — and querying them about past emails and other statements.

Most contentious so far has been Daniel York, chief content officer of AT&T Entertainment Group, who was grilled last week about an e-mail in which he said that content providers were generally “shortsighted whores.” The email was from 2015, and he was referring to programmers who sold their channels to Sling TV, Dish Network’s   streaming service that offered consumers a slimmed down package at a much lower price that traditional pay TV.

York’s testimony ended on Thursday, but he was told that he could be recalled for additional questioning after a dispute is resolved between the parties. It’s unclear what exactly that dispute is, but York was not asked about his role in the troubled introduction of the Time Warner Cable-0wned Dodgers Channel in Los Angeles in 2014, when he was chief content officer for DirecTV. AT&T closed its deal to purchase DirecTV in 2015, and the next year settled a lawsuit brought by the Justice Department claiming that York was at the center of an effort to ensure that Time Warner Cable’s rivals did not carry the channel, given its hefty price tag.

The DOJ has been trying to show that AT&T will try to limit innovation that threatens the traditional pay-TV business model, while the company has pointed to its introduction of DirecTV Now, a streaming service alternative to its satellite service.

Executives from Charter, Cox and Dish Network have testified that they believe that AT&T-Time Warner will have increased leverage after the merger, while a representative from Comcast said that he had “no reason” to think that would be the case.

We’ve Yet to Hear from a Key Prosecution Witness: That’s Carl Shapiro, an economics professor at University of California at Berkeley, who used a model to show that the merger would translate into a $436 million per year increase in subscribers’ pay-TV bills, or about 45 cents per month. That is a key figure as the Justice Department tries to show that the merger will produce customer harm — as antitrust enforcement is based on a standard of the welfare of consumers.

AT&T-Time Warner’s legal team, led by Dan Petrocelli, has been working from the start of the trial to discredit Shapiro’s finding. They attacked another witness who produced data that Shapiro apparently used in his model, and appear ready to dismiss his model as outside the norm.

The government is still presenting its case, so it’s unclear when two key witnesses for the defense, AT&T CEO Randall Stephenson and Time Warner CEO Jeff Bewkes, will take the stand.

There Are Rules, and Then There Are Rules: On the first day, courtroom marshals warned spectators (or the audience, as Leon calls them) that everyone had to keep two feet on the floor as they watched the proceedings, ostensibly to keep shoes from making scuff marks on wooden surfaces.

That is just one of many rules that govern the courtroom and the hallway outside, albeit there have been varying levels of enforcement. The strictest, though, is a ban on operating electronic devices of any sort. Everyone has to prove that their cell phones and computers are turned off before entering the courtroom. Even a courtroom clock is stopped, at 5:05.

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