The Political Legacy of a Failed Challenge to the AT&T-Time Warner Deal

https://www.nytimes.com/2018/06/12/business/dealbook/att-time-warner-legacy.html

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Whether it was or not, the case always felt political.

The Justice Department’s attempt to block AT&T’s acquisition of Time Warner never made sense on the merits of the case. On Tuesday, Judge Richard J. Leon of United States District Court in Washington said aloud what most antitrust experts had been thinking for months: The government’s case was a losing one.

He repeatedly used the phrase “the government fails” in his 172-page decision. His ruling was peppered with exclamation marks.

Judge Leon ruled forcefully, approving the deal with nary a concession by AT&T and Time Warner and admonishing the government that it shouldn’t seek an emergency stay. Now, the yearlong effort to block the agreement will almost certainly be seen through a political prism of speculation about what motivated it, given President Trump’s well-established distaste for the merger.

Perhaps the greatest irony of the AT&T and Time Warner deal is the role reversal of those who rooted for it and those who fought it.

Some Democrats, members of the party that usually condemns such big mergers, found themselves pushing for the deal to be approved, in part because Mr. Trump opposed it. And some Republicans, members of the party that champions free-market theory, looked for a reason — any reason — to block it.

Rick Manning, president of Americans for Limited Government, a nonprofit opposed to government intervention, twisted himself into a remarkable explanation for why the government should get involved.

“America’s consolidated corporate media monopolies have launched an all-out assault on democracy by trying to stamp out the expression of any ideas that don’t fall in line with liberal-determined political correctness,” he wrote in September, saying that the addition of CNN to AT&T would crowd out conservative viewpoints.

The deal wasn’t even signed back in October 2016 when Mr. Trump turned it into a political football a few weeks before the election.

On the same day that AT&T reached an agreement with Time Warner, Mr. Trump jumped on the headline with a campaign-trail proclamation. “As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” he said. He also took shots at CNN as “fake news” and made derisive comments about its leader, Jeff Zucker.

Even after Mr. Trump’s victory, his opposition appeared to be bluster — until it wasn’t.

The president has insisted that it wasn’t his decision to fight the deal, contending that Makan Delrahim, the head of antitrust at the Justice Department, had come to his own conclusion about the dangers of the proposed merger.

“Personally, I’ve always felt that that was a deal that’s not good for the country,” Mr. Trump said in November. “But I’m not going to get involved. It’s litigation.”

Of course, speculation has continued unabated that Mr. Trump was behind the suit. It didn’t help last month when Rudolph W. Giuliani, a member of Mr. Trump’s legal team, told HuffPost that “the president denied the merger.”

He backtracked afterward, saying he hadn’t been properly informed. “He told me directly he didn’t interfere,” Mr. Giuliani said of Mr. Trump.

Was it one of those? Or something in between? We still don’t know.

And that’s the problem. The calculus for companies considering mergers — or any decision — shouldn’t be whether they think a president will seek to block or approve it on a whim.

Mr. Trump’s immediate praise of the Walt Disney Company’s proposed acquisition of a big chunk of 21st Century Fox — which is owned by his pal Rupert Murdoch — only added to the sense that he is the one pulling the regulatory strings. Sarah Huckabee Sanders, the White House press secretary, said at the time of that agreement that Mr. Trump believed — “to use one of the president’s favorite words — that this could be a great thing for jobs.” Ms. Sanders added that Mr. Trump was “hoping to see a lot more of those created.” It empirically will do the opposite.

If Mr. Delrahim’s reasons for seeking to block the AT&T-Time Warner deal were genuine, Mr. Trump’s behavior only undermined the credibility of his own people. (Mr. Delrahim has seemed to hint that he was amenable to a Disney-21st Century Fox deal, putting him in line with his boss.)

Now the government has lost its case, and companies across the world are spinning up all sorts of megadeals to pursue on their assumption that Mr. Trump’s administration won’t want to risk losing again.

They may be right. Mr. Trump doesn’t like to lose, and that could make his administration more reluctant to police future deals that actually deserve to be blocked.

That would be a mistake — and the lasting legacy of a case that never should have been brought.