Professor Carl Shapiro of the University, who is an expert economist and government witness took to the state on Tuesday to witness in the antitrust case filed by the Department of Justice against AT&T Inc. (NYSE:T). The fate of case against the merger rested largely on the analysis given by Shapiro. According to the analysis, if the merger is succeeds, it will cause a 45 cent per month per cable increase throughout the United States.
However, Dan Petrocelli, the lead attorney for AT&T and Time Warner Inc (NYSE:TWX) accused Shapiro of relying on outdated and higher inputs in his analysis which resulted in an increase in price. By adjusting the inputs from AT&T’s past financial reports like profit margins Petrocelli indicated that the merger would cause a rise in price of at least 13 cents per month per subscriber.
Shapiro admitted that since 2016, profit margins of AT&T have decreased. He was using data extracted from financial reports started from 2016. He also added that if he had included the lower figures recorded in 2017, the overall increase in price for consumers would be much lower. He however defended himself saying that he got the updated data a bit late and did not consider them.
In response, Shapiro accused Petrocelli of concentrating on the low end of what he had said in the analysis adding that it was just a range of possibilities and that he could have also focused on the upper end. Shapiro said that Petrocelli was taking advantage of the fact that he had decided to be conservative. At some moment, the exchange between Shapiro and Petrocelli became contentious. At some point the two started talking to each other forcing Judge Richard Leon to intervene and calm them down. Later, the judge told Shapiro not to change his answers but instead address the question raised by Petrocelli.
Shapiro admitted that he had made a mistake in his testimony when he said that a separate key data on the number of subscribers is an in indication of the number of people who would switch service providers in the event that they lost access to Turner networks.