Key government witness admits error in AT&T-Time Warner case

The AT&T-Time Warner merger could end up costing consumers less money than what some earlier estimates suggest, the government's star witness admitted in federal court as he clashed repeatedly with company lawyers over key figures in his economic analysis of the deal. Instead of paying a minimum of 27 cents more per month on their bills as a result of the deal, TV subscribers could conceivably pay a smaller premium of at least 13 cents a month more — a downward revision in the projections of Carl Shapiro, an economist at the University of California–Berkeley. Toward the other end of the range, the government has said consumers could pay as much as 45 cents more per month on their bills, or collectively hundreds of millions of dollars a year.

Shapiro's concession could weaken the government's case to block the $85 billion merger, which seeks to meld AT&T's wireless distribution capability with Time Warner's massive library of TV and film content. AT&T has sought to demonstrate that the deal will not lead to price increases and has argued that, in fact, it will lead to price decreases for consumers. Contributing to the revised numbers were newer profit-margin data from AT&T that Shapiro said were not available to him when he completed his initial report. He also said he had "made a mistake" in using an outdated figure from Boston-based consulting firm Altman Vilandrie & Co. pertaining to the number of video subscribers who would likely switch TV providers in the event of a protracted programming dispute involving Time Warner and those distributors.