The government's chief economic expert's predictive model actually shows AT&T's buy of Time Warner as a net plus to consumers if that model takes into account Turner's arbitration offer to MVPDs and the FCC's program access rules, testified University of California, Berkeley economics professor Michael Katz Monday in U.S. v. AT&T and TW. That DOJ expert Carl Shapiro didn't account for those is "a fatal error," Katz said.
Faced with competing scenarios of what happens to consumers and the video market if AT&T and Time Warner combine, the judge overseeing U.S. v. AT&T and TW is likely trying to see which set of predictions best lines up with the facts, experts told us. How U.S. District Judge Richard Leon of Washington weighs DOJ and AT&T/TW economic expert predictions is "the $64,000 question," emailed Konkurrenz Group founder Allen Grunes. DOJ expert economist Carl Shapiro (see 1804110025) and companies' expert economist Dennis Carlton (see 1804120023) testified last week.
Actual empirical evidence from past vertical mergers and splits shows consumer pricing ultimately goes down, the exact opposite of the harm DOJ is projecting in the proposed AT&T buy of Time Warner, the companies' economic expert testified Thursday. DOJ hasn't rested, but U.S. District Judge Richard Leon of Washington said he was letting University of Chicago economics professor Dennis Carlton testify out of order so his testimony comes a day after that of Justice's own economics expert, University of California, Berkeley economist Carl Shapiro (see 1804110025).
The judge overseeing U.S. v. AT&T and Time Warner questioned DOJ's assertion that New AT&T would run its MVPD and programming arms in concert, coordinating their behavior. Justice's economic expert testified Wednesday that New AT&T could mean consumers paying $571 million more a year by 2021 in video subscription costs than they would otherwise.
NBCUniversal, when doing affiliation agreements with MVPDs and virtual MVPDs, doesn't think about how such deals might affect Comcast's MVPD business and never has been asked by corporate to make that part of its negotiating strategy, NBCU Content Distribution Chairman Matt Bond testified Tuesday in U.S. v. AT&T and Time Warner. NBCU never withheld content from an MVPD so as to drive subscribers from that distributor to Comcast, and Comcast corporate never asked it to do so, Bond said. "We're interested in getting the most ... distribution we can get."
DOJ and AT&T/Time Warner counsel continued to joust Monday in U.S. District Court in Washington over Turner's alleged market power. Meanwhile, citing unspecified legal issues with confidential business information, Judge Richard Leon Monday afternoon held proceedings behind closed doors and said there wouldn't be any witness testimony until Tuesday. John Harran, Turner senior vice president-business development, digital distribution and strategic partnerships, acknowledged under DOJ questioning that he wrote a March 2016 internal Turner email indicating Turner believed it could "ignite or diminish" interest in the burgeoning field of virtual MVPDs by being in programming bundles or not. He also acknowledged writing an October 2017 internal email indicating "we have the leverage" in talks with YouTube TV, and an October 2016 internal email saying Hulu's virtual MVPD service without Turner or NBCUniversal content would be a recipe for disaster for that service. He said it was possible NBCU would pull its content from Hulu after the expiration of the Comcast/NBCU consent decree. But Harran, under AT&T/TW questioning about the October 2016 email, said he wasn't predicting Hulu's business failure but the failure of its business goal that hoped to have as many networks as possible. The sides also disagreed about AT&T Vice President-Digital Strategy and Experience Devin Merrill's emails and what they say about AT&T strategy for highlighting its DirecTV satellite service over its less profitable DirecTV Now streaming service. Merrill denied he was ever instructed to de-emphasize DirecTV Now and said with its 2016 launch he had "crystal clear" objectives to market and grow the service. DOJ and AT&T/TW have repeatedly battled over the supposed must-have nature of Turner content (see 1804020019 and 1803280025).
While the federal judge overseeing the AT&T/Time Warner antitrust trial last week signaled interest in the sides setting arbitration terms that differ from what TW’s Turner offered (see 1804040022), experts told us it’s doubtful DOJ will suddenly find itself amenable to a behavioral condition to fix competition is- sues in the deal. Some see the possibility of U.S. District Judge Richard Leon of Washington imposing that remedy. Others question if that’s possible. DOJ, AT&T and TW didn’t comment.
Any international space traffic management rules regime likely has to start with individual countries crafting STM rules governing the mushrooming of big smallsat constellations and of other commercial space missions and then standardizing those rules, space experts said Wednesday evening at an FCBA CLE. Oversize STM attention is being paid to the relatively unlikely collision of operating objects when the far bigger problem facing satellite operators is from orbital debris, said OneWeb Mission Systems Engineering Director Tim Maclay.
The judge overseeing U.S. v. AT&T and Time Warner might be considering reworking or amending the arbitration and no blackouts affiliation offer Turner made to MVPDs (see 1711280063). At the end of testimony Wednesday by Charter Communications Executive Vice President-Programming Acquisition Tom Montemagno, U.S. District Judge Richard Leon of Washington asked Montemagno if different arbitration terms, such as "non-baseball-style arbitration," might assuage some fears about the Turner offer. DOJ witnesses raised red flags about perceived shortcomings (see 1803260047 and 1803220033).
Turner's arbitration and no blackouts offer to distributors to assuage government antitrust concerns of AT&T's planned buy of Time Warner (see 1711280063) leaves Turner at a significant disadvantage in negotiations, Turner Vice President-Content Distribution Richard Warren testified Tuesday in U.S. v. AT&T and TW. An adverse witness for DOJ, Warren under cross-examination said he didn't find Justice's belief that New AT&T would use Turner blackouts against rival distributors "a realistic perspective."