A screen shows the current price of Time Warner shares, above the floor of the New York Stock Exchange, shortly after the opening bell in New York, U.S., November 15, 2017. REUTERS/Lucas Jackson
March 29, 2018
(Reuters) – Twelve percent of subscribers would quit their cable or satellite companies if Time Warner Inc’s <TWX.N> Turner networks were no longer available, a Massachusetts Institute of Technology marketing professor said on Thursday.
John Hauser, a professor of marketing at MIT, was the fourth witness to be called by the U.S. Justice Department in its lawsuit to block telecommunication company AT&T’s <T.N> $85 billion deal to buy Time Warner.
The U.S. government opposes the $85 billion deal, arguing that it would hurt consumers because AT&T, which owns pay TV service DirecTV, would have more leverage to raise prices by owning Time Warner’s Turner networks.
Hauser’s findings are important to the Department of Justice’s case because the assertion that the merger could result in cost increases for cable and satellite subscribers assumes that 12 percent of subscribers would switch providers if Turner’s networks were no longer available.
Hauser’s study was based on an online survey of 1,600 television watchers, using a number of decades-old research methodologies, he said on Thursday.
In cross-examination AT&T attorney Peter Barbur noted that Hauser did not take into account the effects of actual historic blackouts of Turner programming.
Barbur said that Warren Schlichting, group president of Dish’s Sling TV, testified on Tuesday that 30,000, or 0.25 percent, of its subscribers dropped Dish when Turner programming went dark for about a month in 2014.
Barbur also said that Cable One provided testimony that it lost less than 1 percent of subscribers when Turner’s networks went down for about a month in 2013.
“Instead of looking at real world data on blackouts, you were retained to do a survey,” Barbur said.
Hauser said that without knowing the entire scenario of those situations, it was hard to say why the results were different from his findings.
“I believe my numbers are accurate,” he said.
The trial, which is taking place in the U.S. District Court in Washington, is expected to take six to eight weeks.
(Reporting by Jessica Toonkel; Editing by Susan Thomas)
