AT&T-Time Warner Trial Puts Spotlight on Antitrust Chief’s View of Mergers

Makan Delrahim

The Justice Department’s attempt to block AT&T’s massive merger with Time Warner goes to trial March 19, and it’s hard to think of any recent case that has greater implications for the future of show business.

The outcome will be a road map for regulatory approval for other media mergers lined up behind it, like Fox and Disney and possibly CBS and Viacom, but it also represents a big gamble for the man at the center of it all, Makan Delrahim, the DOJ’s antitrust chief, who was less than two months into his tenure before deciding to take AT&T and Time Warner to court.

“If it were sports and you were preparing your schedule, you don’t always start off with one of your toughest teams first,” said William Kovacic of George Washington University, a former Delrahim colleague. “This is playing one of the tough matches first.”

That it is. The judge in the case, Richard Leon, a George W. Bush appointee, rejected an initial attempt by AT&T’s legal team to obtain additional email and other communications between the Justice Department and the White House that could shed light on whether Trump, in his disdain for Time Warner unit CNN, influenced the decision to block the merger.

Even absent the Trump angle, AT&T and Time Warner have expressed nothing but confidence in their case, led by Dan Petrocelli, a famed litigator who is not an antitrust specialist.

Petrocelli has so far signaled that one of the companies’ central arguments in defense will be that past vertical mergers like this one have not led to consumer harm, and that AT&T and Time Warner are being singled out.

So far, the Antitrust Division’s team, led by longtime Justice Department attorney Craig Conrath, have argued that they found the proposed transaction problematic well before Delrahim, who previously served as a deputy counsel to the White House, took the reins in late September.

In a hearing last month, Conrath said the DOJ offered AT&T-Time Warner different options: Keep CNN and Turner Broadcasting but divest another part of AT&T like DirecTV; keep all of AT&T but divest the Turner division, including CNN; or allow partial ownership of Turner.

Before the lawsuit, there was a sense on Wall Street and Capitol Hill that despite Trump’s professed opposition to the deal, his election would usher in a hands-off attitude toward mergers just as he has pursued a broad policy of deregulation.

Gene Kimmelman, the president and CEO of public interest group Public Knowledge and the former chief counsel in the Antitrust Division, said that many people ignored certain signals that spelled trouble for the deal. Delrahim and many other conservatives have been no fans of mega-mergers that are approved with a set of “behavioral” conditions, like the ones that were attached to Comcast’s acquisition of NBCUniversal in 2011, Kimmelman noted. Instead, when faced with a problematic transaction, they favor asset sales, in large part because it washes the government’s hands of having to exert oversight to make sure the conditions are followed.

Delrahim is “a very forceful personality. He is confident of his knowledge of antitrust law.” Another asset: Delrahim served as chief counsel for the Senate Judiciary Committee under Orrin Hatch, making him “well-versed in the political process” and able to divide legal questions from partisan ones, Kimmelman added.

Delrahim declined to comment through a spokeswoman, but in a recent Q&A at George Washington University, he rejected notions that his conservative philosophy meant that antitrust review would be relaxed. “I don’t think anyone can accuse us of being shy about enforcing the law,” he said.

Delrahim was 10 years old in 1979 when his parents moved from Iran to Westlake Village, Calif., a bedroom community of Los Angeles where his aunt lived. He said his family escaped the country as Jewish political refugees, having been exempted from President Jimmy Carter’s ban on visas to citizens of Iran.

But he and the rest of his family spoke no English. He said he would run “as fast as I could” from his school at lunchtime to get home, and “I just cried and said, ‘I don’t know what I am doing. I don’t understand a word.’”

He recalled the American hostility to Iranians at that time, even to those who were fleeing the Islamic revolution after the fall of the shah. “There were a lot of choice words starting with an ‘f,’” he said.

Because of the advanced education in the sciences in Iran, he excelled at math, something that bolstered his confidence. It “helped me stick around without going completely over the edge,” he explained. He has said that growing up as an Iranian immigrant has had an influence on some of his conservative viewpoints, such as personal responsibility, and that it has given him a degree of humility. “I don’t take anything for granted,” he said.

That included his Senate confirmation last year, which went on for six months longer than expected, something that Delrahim attributes to a much more partisan atmosphere than when he last lived in Washington. Friends and colleagues say Delrahim is more of a pragmatist than an ideologue.

A graduate of UCLA in 1991 and then George Washington University law school in 1995, he joined a prestigious D.C. firm, Patton Boggs, before landing a spot on the Judiciary Committee staff in 1998. He had a stint at the Antitrust Division from 2003 to 2005 before he returned to Los Angeles to work at the firm Brownstein Hyatt Farber Schreck.

While he was in private practice, and shortly after the AT&T-Time Warner transaction was announced, Delrahim went on Canadian TV and said he didn’t see the merger as being a “major antitrust problem.” AT&T-Time Warner has seized on those comments in an effort to cast doubt on the government’s rationale for its suit. Delrahim has since noted that he also said earlier that such a transaction would raise concerns.

Whichever way the trial goes, Delrahim will be scrutinized on how he handles other mega-transactions. Kimmelman says of Delrahim: “He’s going to have plenty of opportunity to demonstrate to us if he’s the real deal or if there’s something else going on.”