At the Department of Justice, staff members in the antitrust office have been doggedly investigating AT&T’s blockbuster $85.4 billion bid for Time Warner.
They have deposed the executives of both companies; questioned several media, telecommunications and technology rivals; and demanded thousands of pages of confidential documents from scores of businesses to discern if the deal
would violate competition laws — and thus if it should go ahead at all. But eight months into the review, the small army of career antitrust officials is marching toward a great unknown.
For one thing, the Justice Department officials still don’t have a boss who will have the final say on whether to approve or block the deal.
President Trump’s pick for assistant attorney general in charge of antitrust matters, Makan Delrahim, has been held up in a logjam of nominees in the Senate.
And Mr. Trump
himself, who said during last year’s campaign that he opposed the deal, is another wild card. A senior administration official said last week that members of the White House were discussing how they might use their perch over the merger review as leverage over Time Warner’s news network, CNN.
All of that has effectively put into limbo the most significant business deal
before the Trump
administration, a benchmark for business transactions going forward. In turn, that has cast a cloud over the business world, which is watching the lengthy regulatory process with intense interest. “We’ll obviously take a hard look at that,” Charles W. Ergen, the chief executive of Dish Network, said in a call with analysts in November, referring to AT&T’s bid for Time Warner.
“It’s going to be a big deal.
We’re certainly going to have some concerns.”
Ergen said that AT&T’s purchase of Time Warner
would spur other cable and satellite companies to seek deals with wireless companies and content firms. “People on the sidelines have to do something different,” he said. “You can remain on the sidelines, but that might be malpractice.”
is still expected to be approved because AT&T
and Time Warner
don’t directly compete. But unlike past megamergers such as Comcast’s purchase of NBCUniversal in 2013, this one is potentially trickier from an antitrust perspective. That’s because AT&T
has a nationwide footprint with its wireless and DirecTV satellite service, and could use that reach to demand higher fees from media companies
and other cable and satellite firms.
“The business community is watching intensely to see what an antitrust D.O.J. will look like in the Trump
administration and how much of the rhetoric from the campaign trickles down into policy,” said Vivek Stalam, an analyst at New Street Research. “People are looking at AT&T-Time Warner
as the first indicator of what that will be like.”
As the review process drags on, business leaders are not sitting on their hands, with many continuing to carry out their strategic plans.
In May, Lowell McAdam, chief executive of Verizon, which has already snapped up AOL and Yahoo
to expand its digital media offerings, said at an industry conference that the telecom company was keeping its eyes and ears open for deal
“We have always been a company that prefers to do organic growth,” he said. “But if there was an opportunity to accelerate the strategy, we would look at that. And people should be fired if they don’t look at those sorts of things.”
Still, the bumpy regulatory process adds uncertainty. While the AT&T
and Time Warner
regulatory review is not taking longer than those of other megadeals, the delay in bringing in a permanent assistant attorney general has put the process into a holding pattern. And in the vacuum of leadership, more obstacles have emerged for the deal.
Some employees of media and telecom companies were recently deposed as a part of an investigation by a coalition of about 20 state attorneys general into AT&T’s purchase of Time Warner, according to two people with knowledge of the depositions, who asked not to be named because they were not authorized to speak publicly.
The attorneys general asked whether AT&T
would charge competitors like Dish higher fees for Time Warner
content such as HBO shows and N.B.A. basketball games on TNT, and whether such price increases could lead to higher television costs for rural customers who rely on satellite services, said the people with knowledge of the investigations. The attorneys general are sharing information with officials at the Justice Department.
Justice Department officials and the state attorneys general are also exploring whether other content companies such as Starz, Cinemax and Showtime — premium channels offered at an extra cost like Time Warner’s HBO — could have a harder time reaching AT&T
customers, according to five people with knowledge of the investigations. Those companies are concerned that AT&T
could promote only HBO to customers, they said. AT&T
could also offer free and unlimited viewing of HBO for its wireless customers while the streaming of competing premium channels would count against monthly data limits.
Some lawmakers have become more vocal about their concerns. Several Democratic senators recently wrote to Attorney General Jeff Sessions that the deal
should be blocked if there was evidence of consumer harm. And Senator Susan Collins, a Republican
from Maine, wrote a letter last month to the Justice Department’s acting head of antitrust, asking for stronger scrutiny of the deal
so that consumer choices would not be reduced.
On Friday, Senator Amy Klobuchar, Democrat of Minnesota, also expressed alarm at reports that the White House might be trying to influence the Justice Department’s merger review because of Mr. Trump’s rocky relationship with CNN.
“Any political interference in antitrust enforcement is unacceptable,” Ms. Klobuchar wrote to Mr. Sessions. “Even more concerning, in this instance, is that it appears that some advisers to the president may believe that it is appropriate for the government to use its law enforcement authority to alter or censor the press.”
The Justice Department declined to comment.
has said it still expects the merger review to be completed by the end of the year. Last month, AT&T’s chief executive, Randall Stephenson, attended a White House tech event, the latest of several meetings he has had with other executives and White House officials since the election. Since the Time Warner
bid was announced, AT&T
has spent $8.2 million on lobbying. It had 27 outside lobbying firms and was ranked eighth in total lobbying spending.
has said that it has no incentive to withhold Time Warner
shows from competitors and that the review appears to be moving smoothly. “Over the past eight months, we have provided information to any regulator that has requested it, and we have appreciated the chance to answer their questions,” said Fletcher Cook, a spokesman for AT&T.
Rival companies may push for the Justice Department to demand tough conditions for merger approval — but not to reject the deal
outright. Inspiring government regulators to crack down on an acquisition would endanger their own consolidation efforts.
Even so, the uncertainty is set to continue.
When the Senate comes back into session on Monday, Mr. Delrahim, Mr. Trump’s nominee, will have three weeks to get confirmed before the full August recess. But it is unclear whether he will move past the logjam, and a delay in his appointment could significantly set back AT&T
and Time Warner’s review. Antitrust experts are doubtful the companies and the Justice Department would want to rush through the investigation until Mr. Delrahim is in place.