The Right Choice For The Wrong Reasons? DOJ Sues To Kill The AT&T Time Warner Merger
from the highly-selective-empathy dept
If you’ve been paying attention, the Trump admninistration has been engaged in a frontal assault on everything from net neutrality to media consolidation rules, its legacy-industry-cozy policies driving a new wave of mergermania in telecom and media. As such, few thought the administration would block AT&T’s $86 billion acquisition of Time Warner. After all, AT&T wasn’t acquiring a direct competitor, and the harms caused by vertical integration — however real — haven’t been a genuine concern in regulatory telecom oversight from either party for years (see Comcast NBC Universal or Sinclair Tribune).
But then rumors began to emerge that the Trump DOJ was contemplating suing to block AT&T’s latest megamerger — unless it was willing to sell either DirecTV (acquired by AT&T last year) or Turner Broadcasting, owner of CNN. Reports indicate that AT&T refused both options and was primed for a court showdown. This week the DOJ announced it would be giving AT&T what it wanted, and is taking AT&T to court to block the deal on antitrust grounds:
“Makan Delrahim, the department?s top antitrust regulator, said the Justice Department opposed the deal because it would create a communications and media behemoth unrivaled in its ability to reach most American homes with wireless and satellite television services and valuable programming such as CNN and HBO, the home to ?Game of Thrones.”
“This merger would greatly harm American consumers,? Mr. Delrahim, the assistant attorney general for antitrust, said in a statement. ?It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”
Consumer advocates have long opposed the merger, arguing that AT&T will use its greater size and leverage to amplify what already is a fairly solid legacy of anti-competitive behavior, including making it harder for streaming companies to gain access to the content (especially HBO) they’ll need to compete with AT&T’s DirecTV Now service. As such, many consumer groups were quick to applaud the lawsuit. Albeit with the caveat that they weren’t entirely sure the Trump DOJ was doing this for quite the reasons it claims:
?It?s refreshing to see the Justice Department doing something about this deal. However, we remain very troubled by President Trump?s threats to punish outlets like CNN that have aired critical coverage of the administration. The Justice Department must demonstrate that Trump?s saber-rattling has nothing to do with this suit. It could start by giving the same level of scrutiny to other mega-deals like Sinclair?s proposed merger with Tribune. But the bottom line is that the public would be best served if this merger is scrapped.”
Concerns that the Trump administration is (ab)using the DOJ for petty grievances and cronyism aren’t unfounded. A Trump administration official in July told the New York Times that it was pondering using the deal as leverage against the network. And Rupert Murdoch has been pushing Trump to block the deal since at least January, worried that it would pose a greater competitive challenge to his own News Corporation empire. AT&T had rejected at least two Murdoch overtures to buy CNN in the last six months, which is why the DOJ may have wanted AT&T to divest Turner Broadcasting.
All told, it’s hard to believe that a Trump administration that has an active disdain for consumer protections — and is going well out of its way to aid the Sinclair Tribune deal — is suddenly hyperventilating about the vertical integration antitrust ramifications of AT&T Time Warner. AT&T clearly smells something a bit fishy in the water, and is conducting an investigation into whether Trump pressured the DOJ to change its tune. After all, DOJ antitrust boss Makan Delrahim had, until the last few months, said he saw no problems with the deal. AT&T’s also investigating Rupert Murdoch’s role in the DOJ’s sudden, breathless concern for consumer welfare:
“AT&T intends to seek court permission for access to communications between the White House and the Justice Department about the takeover, said the people, who asked not to be named because the deliberations are private…AT&T will also try to get any evidence about whether Rupert Murdoch tried to influence the review, according to one of the people. Murdoch, a Trump confidant, controls 21st Century Fox Inc., the parent of Fox News. The president has praised Fox News?s coverage of his administration.”
AT&T’s already making it clear that if there is dirty pool at play here, it will help it come out in the wash:
Lawyer for AT&T/TW on Trump or WH interference: On details, he said "they have a way of coming out? probably wont bode well for the government if it does"
— Tony Romm (@TonyRomm) November 20, 2017
All told, this is poised to be one of the uglier legal showdowns in recent antitrust memory. And it’s forcing folks aligned against the deal to ask themselves if the ends justify the means, even if cronyism and a frontal assault on the media — not consumer welfare — are fueling the court battle.