WASHINGTON — The Justice Department’s chief economic expert sparred with AT&T-Time Warner’s lead attorney at the antitrust trial on Tuesday in a number of tense exchanges over the method for estimating the consumer impact of the proposed merger.
At one point, Daniel Petrocelli, the lead attorney for AT&T-Time Warner, and Carl Shapiro, professor at University of California at Berkeley, talked over one another until they were stopped by U.S. District Judge Richard Leon.
Later, Leon stopped Shapiro as he became agitated as Petrocelli pressed him on his use of a figure from consulting firm Altman Vilandrie & Co. that was later changed and updated.
“I have my views. I apologize,” Shapiro said to the judge at one point.
The figures were used in estimating how many subscribers would be lost in a protracted dispute in which Time Warner content is pulled from a distributor during a carriage dispute. Those numbers were used in Shapiro’s calculations that the merger would ultimately end up costing pay-TV consumers.
Shapiro argued that in his methodology, he provided a range of potential impacts of the merger. He said that AT&T-Time Warner and its experts were fixated on the lower end of those numbers, minimizing the potential impact of the transaction.
The emotion on display reflected the dispute between Shapiro and the economic expert retained by the companies, Professor Dennis Carlton of the University of Chicago.
Petrocelli also challenged Shapiro on why he used data from June, 2016, to calculate customer lifetime value, another input used in Shapiro’s model, rather than more updated numbers from 2017, which show less of an impact of the merger.
Shapiro acknowledged that under such new data, pay-TV subscribers would see an estimated 13 cents per month increase, from an earlier projection of a 27 cents per month increase.
Shapiro suggested that AT&T waited until the last minute to provide the numbers, and did not know enough about the new figures to use them.
“Apparently I am suffering the consequences of being conservative,” he said, again emphasizing that he made a point of offering a range of potential impacts.
He also countered attacks on his economic projections of the merger, arguing that it used a standard model that was “theoretically sound” and used by the FCC in studying the Comcast-NBCUniversal merger. That was approved in 2011.
Carlton had attacked Shapiro’s use of the model, characterizing it as complicated.
“It reminded me of a quote form Albert Einstein: ‘Everything should be as simple as possible, but no simpler,'” he said.
He may be called again on Thursday, when the witness list will have been completed. Leon said that he would schedule closing arguments then.