A Media Merger Is Mugged by Bureaucrats, Not Donald Trump
Is dirty politics going on at the Justice Department’s antitrust division?
The proposed merger of AT&T and Time Warner has suddenly run into trouble despite being under review for more than a year. Liberals who usually can’t stand a media combination are cheering the deal on because they dislike Donald Trump, who during last year’s campaign said the deal should be blocked, apparently because of his animus against CNN. The folks at CNN, a Time Warner property, are particularly incensed by the last-minute obstacles. They smell an improper Trump political vendetta against their news organization.
Suspicious too are many independent analysts, who have generally endorsed the deal as strongly pro-competitive because wireless would finally start to be used to challenge the local cable oligopolists.
Opinion Journal Video
When has a new antitrust chief so thoroughly stepped in the salmon mousse?
All this is unfair to Makan Delrahim, who arrived as the department trust-busting chief just a few weeks ago and immediately threw a wrench into a deal that many expected to sail through.
The little-known lawyer is portrayed in the press as a Trump stooge, a political hack. He’s getting a bum rap. Mr. Delrahim has upset the AT&T-Time Warner apple cart, all right. But he’s doing it not for Donald Trump. He’s doing it for the sake of Washington’s army of antitrust lawyers, lobbyists and hand-holders who otherwise would have to find honest work.
The regulatory establishment he now heads, in fact, has devoted a decade to elaborating new rationales for meddling in increasingly competitive media and telecom markets. Check out the 2015 Duke University speech of Mr. Delrahim’s predecessor, Bill Baer. Revisit the strained reasoning behind the Obama administration’s “net neutrality” intervention.
A kind of virginity is lost in the transition from outsider to insider. Mr. Delrahim, as a mere Pepperdine law professor, said of the AT&T deal: “Just the sheer size of it, and the fact that it’s media, I think will get a lot of attention. However, I don’t see this as a major antitrust problem.”
As the most prominent defender of Washington’s antitrust imperium, his priorities now are different. A major antitrust problem must be found if antitrust is to retain its political and bureaucratic relevance.
His intellectual path was laid down by the Obama regulators when they vetoed a majorComcast cable deal as well as two proposed big wireless mergers. Their reasoning, which he now applies to the AT&T-Time Warner deal, is distinguished mainly by what it ignores.
Ignore the fact of cord-cutting, which is unraveling the traditional cable TV business model. Ignore the emerging competition of fixed and wireless, which is blowing up the separate sandboxes once enjoyed by the mobile and cable industries.
Ignore the explosive arrival of Amazon Prime, YouTube and Netflix to command a large and growing share of the hours that Americans once devoted to watching traditional TV.
Embrace the premise that AT&T’s control of CNN and a handful of other modestly popular Turner Broadcasting channels is tantamount to a monopoly on medicine for orphans.
Promote the preposterous notion that CNN, though regularly whupped in the ratings by Fox News and MSNBC, is a precious asset that would give AT&T power to bring Comcast, Charter, Apple, Netflix, Google, et al. to their knees.
Voilà, an excuse to meddle in the deal.
In truth, Mr. Delrahim’s colleagues at Justice were already manufacturing reasons to lard the deal with so-called behavioral remedies before letting it go through. Mr. Delrahim merely upped the ante on arrival by saying behavioral remedies aren’t enough, divestitures are required.
Altogether, there is nothing novel in this episode, except the idiosyncratic Trump factor.
Merger review—and especially review of media mergers—has long since become an occasion for arbitrary regulatory shakedowns at least since the Clinton years. Mr. Trump’s anti-CNN grudge actually appears to be providing AT&T a measure of inoculation. Judging by Friday’s headlines, Mr. Delrahim already is in full retreat under hostile fire from the usually anti-merger left.
If so, the ending will be a happy one. Mr. Trump’s off-the-cuff jibes are seldom worth taking seriously. Certainly his attacks on CNN were the furthest thing from Mr. Delrahim’s mind when he began looking for reasons to fiddle with the AT&T-Time Warner deal.
This episode, from beginning to end, is about the bureaucracy being the bureaucracy. The only shocking thing is that partisan politics, for once, are working in favor of protecting the right of two big companies to merge.
Appeared in the November 11, 2017, print edition as ‘A Media Merger Is Mugged by Bureaucrats, Not Trump.’