WASHINGTON (CN) – As the AT&T antitrust trial winds down, the government made a final push Monday to discredit claims by the communication giant that its $85 billion merger with Time Warner will result in $2.5 billion in cost savings and additional revenue.
But Ronald Quintero, the government’s expert witness who disputed that claim last week, conceded on the witness stand that the merger would likely result in efficiencies.
Quintero had insisted during his testimony Thursday that AT&T shouldn’t get any credit for roughly $2 billion in efficiencies from the merger. On Monday he said that’s because none of them were verifiable or specific to the merger, calling some of the figures AT&T and Time Warner used to come up with their projected cost savings “speculative.”
But during a tense cross examination of Quintero, AT&T attorney Rob Walters suggested that he took “marching orders” from the Department of Justice and ignored AT&T’s long history of achieving cost savings after successful integrations.
Walters asserted that Quintero used a standard that would ensure he arrived at zero when estimating efficiencies from the merger.
Quintero said Monday there was no reason for him to consider AT&T’s prior merger history, but Walters accused him of failing to dig deeper to verify the projections. Walters noted that Quintero did not reach out to AT&T to explain its projections.
Quintero said the company didn’t give him enough material to work with to enable him to factor in some of the potential cost efficiencies the merger could generate, such as from the departure of Time Warner’s CEO Jeffrey Bewkes and its board of directors after the merger.
“I only know what they provided in documentation,” Quintero said.
Quintero noted that he worked with the documentation AT&T did provide, but he admitted that a “high degree of likelihood” exists that AT&T will experience efficiencies from the merger. However, he continued to defend his own projections throughout his testimony.
The issue of cost savings, more commonly known as synergies in the context of mergers, could factor heavily into U.S. District Judge Richard Leon’s ultimate ruling on the merger. If AT&T’s $2.5 billion estimate is accurate, it could offset the $436 million in annual price hikes the government has estimated will result from the transaction.
AT&T and Time Warner executives have testified throughout six weeks of trial that the merger could in particular lead to hundreds of millions in annual increased advertising revenue by 2020, which would allow them at the very least contain, if not drop, prices for consumers.
Last week, Time Warner CEO Bewkes said the company needs AT&T’s consumer data to grow its digital advertising efforts. That move is necessary, Bewkes said, to bolster the company against a seismic shift away from traditional TV advertising toward targeted, digital advertising.
AT&T, meanwhile, wants data from Time Warner’s Turner networks to better target TV advertisements.
But government witness Susan Athey, a professor of technology economics at Stanford Graduate School of Business, said the merger is not required for AT&T and Time Warner to achieve their projections, and that the companies could purchase third-party data to meet their targeted advertising goals.
She also echoed Quintero’s stance that the projected efficiencies can’t be verified.
“My opinion is that these synergies are neither merger-specific nor verifiable,” Athey said when asked for her opinion about the projections. “They appear to simply be assumptions,” she later added.
The government called Athey and Quintero during rebuttal arguments, the last phase of the trial before each side makes its closing arguments. The government’s key economic expert and its last rebuttal witness, Carl Shapiro, will take the stand Tuesday morning.