DOJ Antitrust Boss: ‘You Learn More From Losing’

Following legal rebuke at the lower federal court and subsequent appeals court level regarding efforts to block AT&T’s $84 billion acquisition of Time Warner, the Department of Justice’s Makan Delrahim, head of the agency’s antitrust unit, said more was learned in defeat than in winning the litigation.

Speaking March 20 at the American Communications Association’s confab in Washington, D.C., Delrahim said legal challenges to future corporate vertical mergers — such as Sprint’s pending merger with T-Mobile — were empowered following the AT&T/Time Warner challenge.

“There are many lessons to be learned from the U.S. v. AT&T,” Delrahim said, according to a recording released by the ACA and reported by Deadline.com. “Given the standard of review that we were facing, [the outcome] wasn’t a surprise. You learn more from losing than from winning.”

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Specifically, the executive contends future legal challenges by the DOJ will be based more on structural changes rather than behavior.

Delrahim said the government’s approval of Comcast’s $30 billion acquisition of NBC Universal in 2009 revolved around behavior/consent remedies the cable giant was beholden to follow for a number of years — including silent partnership in Hulu.

Similar regulatory approach to AT&T/Time Warner wouldn’t have been worth the compromise, according to Delrahim.

“The AT&T offer will expire in less than seven years,” he said. “The new market structure [i.e. WarnerMedia] created by the transaction will remain indefinitely. If there’s harm that the arbitration offer is necessary to solve, then there’s likely to be harm in the future that will remain after the arbitration offer expires.”

Delrahim said the silver lining from the appeals court ruling was that some vertical mergers can be harmful to consumers — provided the government proves its case.

“The [appeals court] corrected many of the District Court’s misstatements and articulated a standard that is valuable,” he said.

House Democrats Investigating Whether Trump Personally Sought to Block AT&T/Time Warner Merger

The Democrat-controlled House of Representatives continues to ratchet up scrutiny of President Trump and his administration — now focusing on whether the President personally attempted to block AT&T’s $85 billion acquisition of Time Warner.

The merger, which created WarnerMedia, was officially confirmed last month by a federal appeals court denying an objection by the Department of Justice.

Jerrold Nadler (D-N.Y.), chairman of the House Judiciary Committee, and David Cicilline (D-R.I.) sent letters to Makan Delrahim, chief of the Justice Dept.’s antitrust division, and White House counsel Pat Cipollone, seeking documentation regarding possible interference by Trump.

Jerry Nadler

The inquiry is in response to a New Yorker story that claimed Trump personally wanted to kill the merger largely due to his dislike for Turner-owned CNN and its reporting of his administration.

“Even the appearance of White House interference in antitrust law matters undermines public trust in the Department of Justice’s integrity and tarnishes meritorious enforcement by the antitrust division,” Nadler and Cicilline wrote. “The fact of actual interference would constitute a serious abuse of power.”

David Cicilline

Delrahim has said he was never pressured by Trump to pursue antitrust litigation.

“I have never been instructed by the White House on this or any other transaction under review by the antitrust division,” Delrahim said on Nov. 8, 2017, prior to filing the lawsuit.

AT&T originally sought to investigate Trump’s influence — a request denied by federal judge Richard Leon in the original antitrust trial. CEO Randall Stephenson called Trump’s possible interference the “elephant in the room.”

Makan Delrahim

DOJ Upping Comcast Scrutiny Over Hulu

When Comcast acquired NBC Universal in 2011, federal regulators required the Philadelphia-based media conglomerate to step away from management issues regarding Hulu — the subscription streaming video service it co-owns with the Walt Disney Co., 21st Century Fox and AT&T’s WarnerMedia.

With those and other regulatory restrictions lifted this year, Comcast, which owns 30% of Hulu, now has more of input into how Hulu — and online TV service Hulu Live — operate. The cable operator announced last month the appointment of three members to Hulu’s board of directors, who include NBC Universal executives Jeff Shell, Linda Yaccarino and Matt Bond.

Now the U.S. Depart of Justice’s antitrust unit plans to up its oversight into how Comcast its renewed leverage on how Hulu operates in the pay-TV ecosystem, according to Assistant Attorney General Makan Delrahim.

Speaking Oct. 3 to Senators in Washington, D.C., Delrahim was asked if Comcast increased oversight of Hulu posed a threat to consumers.

“Certainly, Hulu could be a competitor to the cable business,” Delrahim told Senator Richard Blumenthal (D-Conn.), according to Bloomberg. “And it’s one that we will examine carefully to see if they might take any conduct that would harm its ability to compete.”

Indeed, in a letter to Comcast prior to restrictions being lifted, Delrahim reminded the company that government oversight was not in the past tense.

“The department retains jurisdiction to enforce the antitrust laws and takes its obligations seriously,” he wrote on Aug. 14.“We would appreciate your cooperation in keeping us informed by providing the department with any plans you may have to change your policies or practices involving video programming and distribution.”

Interestingly, the DOJ could forward the letter to Disney, which will own 60% Hulu following its $71 billion acquisition of select Fox assets, including Hulu. That deal, whose price tag was significantly reduced following Comcast’s separate purchase of British satellite TV operator Sky, is still under regulatory approval.

Disney plans to launch a branded OTT video service next year – as it did this year with ESPN+.

 

AT&T May Put DOJ Antitrust Boss on Witness Stand

AT&T reportedly plans to put Makan Delrahim, U.S. Assistant Attorney General for the Antitrust Division at the Department of Justice, on the witness stand in next month’s federal trial regarding the telecom’s $85 billion acquisition of Time Warner, according to The Wall Street Journal.

The DOJ filed suit against the merger, claiming the deal would negatively affect consumers and the market.

In a twist, AT&T seeks to question – under oath – the government official responsible for the lawsuit.

Iranian-born Delrahim, who was nominated to the antitrust division by President Trump, and infamously gifted a baseball cap with the slogan, “Makan Antitrust Great Again,” upon his arrival, previously served in the position under President George W. Bush.

Why AT&T seeks to grill Delrahim – a corporate lawyer – revolves around his time as a lobbyist for Comcast, Google, Blue Cross Blue Shield and other major corporations.

Indeed, when the AT&T – Time Warner merger was first announced, Delrahim told a TV interview he didn’t think the merger posed a significant antitrust issue.

Of course, that was before he was appointed by Trump, who many observers believe stepped into the merger at the last minute for largely personal – not regulatory – reasons.

Trump has repeatedly called out CNN, which is owned by Time Warner unit Turner, as a facilitator of false news about him and his administration.

Scuttlebutt suggests the government could okay the deal if CNN and other properties were spun off — a scenario AT&T CEO Randall Stephenson said he wouldn’t agree to.

With AT&T on the hook to Time Warner for $500 million should the merger fail, expect to see Delrahim’s TV interview presented to him in court.