Politics

by Karl Bode


Filed Under:
antitrust, cnn, doj, donald trump, makan delrahim, merger

Companies:
at&t, time warner



Is Trump's AT&T Merger Roadblock A Return To Sensible Antitrust, Or Just More Cronyism?

from the raised-eyebrow dept

Given that the Trump administration has been tripping over itself to obliterate popular consumer protections (net neutrality, broadband privacy) and most media consolidation rules (largely to benefit Sinclair broadcasting), many analysts assumed that the administration would see absolutely no problem with AT&T's latest $86 billion acquisition of Time Warner. After all, such vertical integration mergers -- while they can cause very serious market harms -- are often more difficult to make a case for than mergers where direct competitors are eliminated.

Supporting that position was the fact that Makan Delrahim, Trump's new antitrust boss at the DOJ, had been on record previously stating that he saw no serious problems with the deal. That's why it was a bit of a surprise last week when reports emerged that Trump's DOJ was considering a lawsuit to block the megamerger, and may not approve the deal unless AT&T either sold off DirecTV (acquired last year) or Turner Broadcasting, owner of channels like Cartoon Network, TBS, and CNN.

Given Trump's disdain for CNN's coverage of his Presidency, many began to immediately speculate that Trump was using the merger for leverage. After all, that's what one administration official told the New York Times was on the table in a story back in July:

"White House advisers have discussed a potential point of leverage over their adversary, a senior administration official said: a pending merger between CNN’s parent company, Time Warner, and AT&T. Mr. Trump’s Justice Department will decide whether to approve the merger, and while analysts say there is little to stop the deal from moving forward, the president’s animus toward CNN remains a wild card."

So the idea that Trump would use the merger as leverage to take aim at CNN was clearly something that was on the table. But when asked about the decision while on Air Force One last week, Trump insisted that the decision wasn't his, but was made by "a very respected person," presumably Delrahim:

"Speaking to reporters on Air Force One, Trump said he “didn’t make that decision — it was made by a man who’s a very respected person, a very, very respected person..."I did make a comment as to what I think,” Trump also acknowledged. Previously, the president has blasted AT&T and Time Warner’s merger plans — and during the 2016 election, he threatened to block the companies from combining under his watch.

"I do feel you should have as many news outlets as you can — especially since so many are fake," Trump continued, according to a pool report. Then, he concluded: “I didn't make a statement, but I did make a statement long before. So we’ll see — that probably ends up being litigation, maybe not, we’ll see how it all plays out."

Granted, forcing AT&T to divest either DirecTV or Turner Broadcasting makes sense from a regulatory perspective. Consumer advocates worry that AT&T's greater size, leverage, and control over broadcast content (particularly HBO) will make it harder for streaming providers to license the content they need to compete. They're also worried that AT&T will leverage this advantage -- in concert with its monopoly in broadband and stranglehold over tower backhaul -- to engage in more of the anti-competitive behavior it's well known for (zero rating, etc.).

But it's hard to square this return to sensible antitrust enforcement with an administration that has been taking a mindless hatchet to media consolidation and consumer protection rules. What kind of thought process involves seeing no problem with gutting media consolidation rules (which devastates smaller news outlets and media diversity), yet suddenly having a strong disdain for the often more-murky negative impact of vertical integration? One possible explanation for the policy asymmetry may reside with Rupert Murdoch, who has apparently been trying to get AT&T to offload CNN to News Corporation for much of the year:

"Rupert Murdoch telephoned AT&T Chief Executive Randall Stephenson twice in the last six months and talked about cable network CNN, sources briefed on the matter told Reuters on Friday. According to one of the sources, the 86-year-old executive chairman of Twenty-First Century Fox Inc offered to buy CNN in both conversations.

And again, if you head back to media reports from January, Murdoch had been pressuring the Trump administration to make life harder on AT&T Time Warner, a News Corp. competitor:

"If Fox News’ politics ultimately solidify as more pro-Trump than they were during the campaign, that might be to the benefit of Murdoch’s business interests. According to a well-placed source, Trump has asked Murdoch to submit names for FCC Chairman. Murdoch, another source said, also wants conditions put on the AT&T-Time Warner merger, and he could lobby Trump to make that happen."

Again, it's entirely within the realm of possibility that an administration that has been protecting monoplists and gutting consolidation protections is having an uncharacterstic flirtation with sensible antitrust enforcement under Delrahim. But it's also entirely possible, especially when looking at the administration's behavior in full context, that Trump's DOJ is giving AT&T a hard time simply to aid a political ally and to quash a critical media outlet.


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  • icon
    Richard (profile), 14 Nov 2017 @ 6:48am

    Error

    such vertical integration mergers -- while they can cause very serious market harms -- are often more difficult to make a case for than mergers where direct competitors are eliminated.

    I presume should read

    such vertical integration mergers -- while they can cause very serious market harms -- are often more difficult to make a case against than mergers where direct competitors are eliminated.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Nov 2017 @ 7:58am

    of course they want to be too-big-to-fail

    get their money for nothing and chicks for free...

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Nov 2017 @ 8:10am

    he hasn't been given enough yet to get out of the way. add another mil or so and the merger will go ahead as planned

    reply to this | link to this | view in chronology ]

  • identicon
    David, 14 Nov 2017 @ 8:13am

    Shrug.

    They just haven't ponied up yet the desired amount of bribes, so there will be some saber-rattling.

    Given the expected amount of savings (read: downward spiral of return value for money for the customers) and the level of corruption of the current administration, the deal will most certainly go ahead once everybody gets his expected amount of palm grease.

    reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 14 Nov 2017 @ 9:36am

    Mathematically possible

    Again, it's entirely within the realm of possibility that an administration that has been protecting monoplists and gutting consolidation protections is having an uncharacterstic flirtation with sensible antitrust enforcement under Delrahim.

    In the same way that it's 'entirely within the realm of possibility' for someone to randomly shuffle a deck of cards, hand out four different hands to four different players and have all four hands be royal flushes perhaps.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Nov 2017 @ 9:36am

    So the deal can go through as long as they sell off CNN.... and it just so happens that one of Trumps biggest supporters has been trying to buy CNN.... Hmmm nope, no conflict of interest occurring there.

    reply to this | link to this | view in chronology ]

    • identicon
      David, 14 Nov 2017 @ 11:57am

      Re:

      A knave who thinks of evil here.

      reply to this | link to this | view in chronology ]

    • icon
      McFortner (profile), 15 Nov 2017 @ 1:15pm

      False

      A Trump supporter trying to buy CNN does not equate to Trump trying to buy CNN. Therefore no conflict of interest by the President or the Government.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Nov 2017 @ 3:31pm

        Re: False

        Yeeah. Only potential for some good ole nepotism! But that has been the name of the game in politics since forever, so hardly Trumps invention. Just a concerning if "draining the swamp" should have ever been percieved as possible.

        reply to this | link to this | view in chronology ]

        • icon
          McFortner (profile), 16 Nov 2017 @ 10:15am

          Re: Re: False

          "Only potential for some good ole nepotism!"

          And your proof? Because without proof, you can't convict in a Court of Law. Only the court of public opinion relies on such lax standards, and we all know how often that is wrong.

          reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Nov 2017 @ 5:46pm

      Re:

      That's Putin's response too when his cronies get to own more and more.

      reply to this | link to this | view in chronology ]

  • identicon
    Stosh, 14 Nov 2017 @ 12:32pm

    When it mentions "megamerger" in the first paragraph of any story, you know for certain it's not good for consumers...

    reply to this | link to this | view in chronology ]

  • icon
    Padpaw (profile), 15 Nov 2017 @ 12:44am

    I think many of us have serious concerns over the media hyper focusing on 1 person in an attempt to discredit or ruin them.

    This has been going on since before Trump was elected. Take zimmerman for example. They altered his 911 phone call to make him look like a dangerous racist psychopath and constantly lied about him, all in an effort to play up their ratings they destroyed his life.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 15 Nov 2017 @ 11:56am

      Re:

      that should not be a concern in a mergers anti-trust. Just saying. Strenghtening the leader by letting irrelevant concerns and fears take over from the legal objectives is a surefire way to hell for any country.

      reply to this | link to this | view in chronology ]


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