Two days after Donald Trump said that he would block the merger of AT&T and Time Warner because “deals like this destroy democracy,” a supporter — antitrust expert and law professor Makan Delrahim — expressed a far different view.
“I don’t see this as a major antitrust problem,” he told Canadian television news in October 2016. “I think these folks would have an easier route toward approval” compared with other deals.
Delrahim, who spent six months as one of Trump’s top White House lawyers and managed Neil M. Gorsuch’s Supreme Court nomination, is now head of antitrust enforcement at the Justice Department, and he has adopted a far more confrontational stance in weighing whether to approve AT&T’s $85.4 billion merger with Time Warner.
Delrahim and other antitrust officials told AT&T this week that it would have to divest of key assets for the Justice Department to approve the purchase, according to people familiar with the meeting, speaking on the condition of anonymity because it was private. The assets could include Time Warner’s Turner Broadcasting, which includes CNN, or AT&T’s DirecTV subsidiary.
The newly adversarial stance stirred a debate over whether Delrahim was carrying water for Trump, who has repeatedly lambasted CNN, or simply acting to stem a merger that could hurt consumers based on new information he learned since taking the job.
It’s also led to a rare public standoff between the Justice Department, which usually doesn’t speak publicly about antitrust reviews, and AT&T, which sees the Time Warner purchase as a critical element of its growth strategy.
AT&T chief executive Randall Stephenson vowed on Thursday to defend the deal in court, saying divesting would undermine the idea of creating a content, data and advertising business to rival Google and Facebook.
“Since the day this deal was announced, we have been preparing for litigation,” Stephenson said at a conference hosted by the New York Times. “If we’re going to go to litigation, our preference would be ‘sooner is better,’ and we’re prepared to litigate now.”
Many antitrust experts didn’t expect the deal to run into trouble. The Obama administration and previous administrations largely allowed “vertical” mergers that didn’t involve direct competitors to proceed. A similar deal for Comcast to buy NBC was completed in 2011.
AT&T mainly owns telecommunications networks, while Time Warner produces content.
“You don’t have a good precedent,” said Hal Singer, an economist at George Washington University’s Institute of Public Policy, of a case challenging the merger of two companies that don’t directly compete.
Stephenson on Thursday said he began to suspect the Justice Department’s thinking was changing only recently, after media reports surfaced suggesting the agency was preparing for litigation.
The Justice Department declined to comment Thursday, but Stephen E. Boyd, an assistant attorney general, attempted to clarify Delrahim’s views in a letter this week to Sen. Elizabeth Warren (D-Mass.). Warren had raised concerns that Delrahim would not take the antitrust review seriously.
Boyd pointed out that in his interview with Canadian television, Delrahim also said that the Justice Department should bring a lawsuit to stop the acquisition if its concerns about the deal met the appropriate legal threshold.
Boyd also noted that Delrahim had said during his confirmation hearing that “there are instances where a vertical merger may have anti-competitive effects.”
As they have studied the deal, Justice Department officials have grown concerned that unless AT&T sheds some assets, it could seek to prevent other Internet and TV services from accessing Time Warner content, such as HBO, CNN and Warner Bros., according to one person briefed on the matter who spoke on the condition of anonymity to describe internal discussions.
Some who have worked with Delrahim in the past say it’s most likely his views evolved based on the Justice Department’s continued analysis of the merger.
“Any decision he makes I suspect will be based on a careful review of the facts and the law. It’s not going to be based on politics. It’s going to be based on the facts and the law,” said Trey Childress, the dean of faculty and professor of law at Pepperdine University School of Law, where Delrahim worked before joining the White House.
But Harry First, an antitrust specialist at New York University School of Law, said Delrahim’s oversight of the case is colored in public perception by Trump’s antagonism toward CNN.
“One of the reasons it’s getting the play that it’s getting is because of Trump’s statements of this merger when he was running for president and because of his dislike of CNN,” he said.
Several critics have raised concerns that Trump may be seeking to punish CNN for its coverage by directing the Justice Department to impose tough terms.
“Wait, are we really going to make the @TheJusticeDept use antitrust law to force the sale of a cable channel because the President doesn’t like its news coverage?” Federal Communications Commissioner Jessica Rosenworcel, a Democrat, posted on Twitter on Wednesday. “You can dislike consolidation but still find this extremely disturbing if true.”
Sen. Al Franken (D-Minn.) said in a statement, “Any indication that this administration is using its power to weaken media organizations it doesn’t like would be a profoundly disturbing development.”
The White House has said Trump has not weighed in on the case with the Justice Department.
According to some experts, regardless of whether he has, the president’s constant criticism of CNN could complicate the Justice Department’s case against AT&T if it reaches court.
“One argument AT&T could make,” said Blair Levin, a former Federal Communications Commission chief of staff, “is that there’s compelling evidence that this opposition by the government is actually a way of using the powers of government to silence a political voice. And that is a violation of the First Amendment.”
At the same time, the politics of the merger are not so straightforward. Many liberals, for instance, have argued that the deal should not be allowed to proceed.
Franken, even while concerned about any government pressure to sell CNN, says that the deal overall could “create a massive corporation that would wield entirely way too much power, likely resulting in even higher prices, even fewer choices, and potentially worse service for consumers.”
Lina Khan, the director of legal policy at the Open Markets Institute, said it’s too early to tell how the Trump administration’s approach to antitrust will compare to Obama’s. But if the current apprehension toward the AT&T deal reflects how the Justice Department will approach antitrust issues broadly, she said that could be a welcome development.
“Hearing that DOJ is considering divestitures suggests that they understand the anti-competitive risks of this vertical deal in ways that the Obama administration didn’t,” Khan said.
John Wagner contributed to this report.