Published: Thu, November 09, 2017
Markets | By Rosalie Gross

Is the Trump Administration Objecting to a Big Merger to Punish CNN?

Is the Trump Administration Objecting to a Big Merger to Punish CNN?

"AT&T is buying Time Warner, and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few", he said at an October 2016 rally in Gettysburg, Pa.

The back-and-forth sent Time Warner's stock down 6.5%. Speaking at a rally in Gettysburg, Pennsylvania, on the campaign trail past year, Trump said, "AT&T is buying Time Warner, and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few". Stephenson may have had in mind a tweet from Brian Stelter, a media reporter at CNN, asserting that Justice has said AT&T had privately offered to sell CNN. Two people familiar with the matter said AT&T had volunteered the idea - and that the Justice Department's anti-trust division had flatly rejected the proposal. But the source said Delrahim had been critical of the deal since taking the helm of the DOJ's antitrust division.

The Justice Department's new demand is likely to complicate its continuing antitrust conversations with AT&T, which said on Wednesday it was now uncertain when the deal, announced in October 2016, would be completed.

Antitrust lawyers were scratching their heads Wednesday over published reports that the Justice Department is insisting that AT&T sell its CNN cable network, or its DirecTV satellite television unit, if it wants to win approval to buy Time Warner.

At an investors conference Wednesday, AT&T Chief Financial Officer John Stephens said he could not comment on discussions with Justice, which he described as ongoing. Shortly after the first one, Mr. Trump lashed out at CNN on Twitter, saying of the news network that "their credibility will soon be gone!"

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As a candidate, President Trump publicly vowed to block the deal. As president, he frequently criticizes CNN.

"By immediately lowering the corporate tax rate to 20 percent, this bill will stimulate investment, job creation and economic growth in the United States", said Randall Stephenson, AT&T chief executive. Obama-era regulators in 2011 approved a similar media merger, cable company Comcast's purchase of NBCUniversal, with a slew of requirements for Comcast's business practices attached. Trump accused CNN and other media outlets of unfair coverage.

AT&T has long noted that "vertical mergers" - when one company buys another that isn't a direct competitor - are typically approved. Are the invisible hands of Donald Trump pulling the strings regarding the CNN divestiture? "While we won't comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception".

Separately, Mr. Trump has criticized the proposed merger from a populist perspective. He said he wants the department to investigate his political rivals, including Hillary Clinton.

Executives at both AT&T and Time Warner have privately expressed bewilderment about the request from the Justice Department.

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