By Jason Hicks
|Cartoon tweeted by President Trump in August 2017|
According to several news outlets, the Department of Justice has called on AT&T and Time Warner to sell DirectTV or Turner Broadcasting, which includes CNN, in order to gain approval of AT&T’s $84.5 billion acquisition of Time Warner.
The New York Times reports that executives at AT&T and Time Warner are bewildered at the request because the proposed deal is a vertical merger. When approving Comcast’s similar acquisition of NBC Universal, under the Obama administration, the DOJ and FCC imposed several conditions on Comcast’s business practices to prevent Comcast from withholding content from rivals. The New York Times explains that these “behavioral remedies” are typical in vertical mergers, but “[t]he Justice Department’s demands for divestitures would be a major change in antitrust policy…”
Reuters reports: “Trump, who has accused Time Warner’s CNN and other media outlets of being unfair to him, criticized the deal on the deal on the campaign trial last year and vowed that as president his Justice Department would block it.”
The Financial Times reports: “‘Its all about CNN,’ said one person with direct knowledge of the talks between the company and the DOJ, adding that the regulator made it clear to AT&T that if it sold CNN the deal would go through.”
An unnamed source is quoted by Politico as saying: “The only reason you would divest CNN would be to kowtow to the president because he doesn’t like the coverage. It would send a chilling message to every news organization in the country.”
In July, the New York Times reported that White House advisers had discussed using the deal as “a potential point of leverage over their adversary” CNN. This reporting prompted Democratic Senators to warn against political intervention. “Any political interference in antitrust enforcement is unacceptable” wrote Senator Amy Klobuchar to Attorney General Jeff Sessions, according to a CBS story. Her Minnesota colleague Al Franken stated “The Trump Administration’s war against the media must not influence the fate of the transaction.”
On Sunday, Kellyanne Conway said that the Trump administration is not interfering with the Justice Department’s review of the deal.
To make matters more complicated, today DOJ sources apparently told Fox News that it was AT&T who offered to divest CNN, but that the DOJ rejected this offer. But according to CNN, the AT&T CEO denies this, stating: “Throughout this process, I have never offered to sell CNN and have no intention of doing so.”
Apart from the “he said, she said” reporting, there are obvious political and First Amendment implications to this story, as well as antitrust concerns. This will be the first major decision for Makan Delrahim, the newly appointed antitrust chief at DOJ. Delrahim voiced tentative support for the deal prior to his nomination, but is said to be looking at it more closely now that he is in office. Even before the news came out today, analysts said that the AT&T/TimeWarner deal “could be an early test of Delrahim’s public perception as an independent official.”