Is Trump threatening to kill AT&T's Time-Warner merger if it doesn't sell CNN?

Sounds reeeeeally shady at first blush but there are two big caveats. One: The DOJ has offered the companies a second option that doesn’t involve offloading CNN. If this is all about damaging Trump’s least favorite news network, you wouldn’t think there’d be an alternative on the table that avoids that.

Two: It’s hard to know whom to trust here. Seems to me that if the DOJ was giving AT&T and Time-Warner a hard time on approving their merger, whispering falsely to the media that it was all about POTUS’s dislike of CNN would be a perfect way to get the Department to quickly change course and grant iapproval. The DOJ’s reputation would be wrecked if the public came to suspect that it was carrying out political vendettas against the media for the president. This afternoon’s stories may be AT&T’s version of a brushback pitch to the antitrust division.

Maybe the two sides can compromise and have AT&T agree to keep CNN but sell Jim Acosta. Everyone wins in that deal.

AT&T has been told by the US Department of Justice that it needs to sell CNN, Time Warner’s cable news channel, to get its $84.5bn acquisition of the media company approved, according to three people with direct knowledge of the negotiations…

“It’s 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.

It’s a Trump revenge plot! But wait. CNN itself is reporting that the DOJ wants AT&T to sell all of Turner Broadcasting as a condition of the merger. That includes CNN but it’s not limited to CNN (there’s also TBS, TNT, etc). Is CNN really the administration’s target? According to one source, yes: “Threatening Turner is a fig leaf for threatening CNN.” But it gets more complicated: CNBC claims that the Justice Department has given AT&T a choice of selling either Turner Broadcasting or DirecTV. That’s what I meant up top about a second option for the company. If the White House is targeting CNN, there should be no DirecTV alternative on the table, right? There’s no vendetta here.

Are we sure, though? “Vertical mergers” like this one are routinely approved by the DOJ. The new head of the antitrust division, Makan Delrahim, said before he took the job that he didn’t think the AT&T/Time-Warner deal posed any major antitrust problem. Now he does. Former federal prosecutor Renato Mariotti notes that typically the Justice Department will take an interest in a merger on antitrust grounds if it fears a monopoly will result. But there’s no risk of that here:

“The only reason you would divest CNN would be to kowtow to the president because he doesn’t like the coverage,” a source familiar with the negotiations between the DOJ and AT&T told Politico. “It would send a chilling message to every news organization in the country.” And it’s not as if the White House itself has suggested no political interest in the outcome of this merger. Trump himself talked about it on the trail last October — and specifically mentioned CNN in doing so: “As an example of the power structure I’m fighting, 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.” As recently as July, White House advisors were allegedly talking about using the AT&T merger as a “potential point of leverage” over CNN’s unflattering coverage of Trump. Nixon followed the same strategy decades earlier to try to intimidate the broadcast networks. There’s no hard evidence that animus towards the network is driving DOJ concerns about the merger but it’s also not “Trump Derangement Syndrome” under the circumstances to be suspicious.

As for the “choice” given to AT&T to divest itself of either Turner Broadcasting and CNN or DIrecTV, I’m not sure that’s a meaningful choice at all. I can’t find a reliable estimate for the value of Turner but AT&T paid a whopping $67 billion to acquire DirecTV two years ago. AT&T revenue climbed more than 11 percent in 2016 thanks in part to DirecTV. Having acquired the company so recently and paid so much for it, any choice for AT&T between selling off DirecTV or Company X seems likely to be resolved in favor of selling off Company X. It could be that the DOJ gave AT&T a choice of which asset to divest purely for the sake of creating a fig leaf, so that the Department could kinda sorta truthfully say, “We’re not insisting that they sell CNN!” Right, they’re not insisting. But they’re making it very hard for AT&T to do anything else.

The best argument for believing that this isn’t politically motivated, I think, is that it would be not just an enormous scandal but a scandal in broad daylight. The White House leaning on the DOJ privately to punish a media outlet for unflattering coverage by damaging it financially — and the Department of Justice going along? That’d be a career-killing mistake for a lot of people. And given the volume of invective Trump has spewed at CNN, any hiccup in the merger approval process would be destined to draw intense media scrutiny. Seems hard to believe Delrahim would destroy his department by carrying out a vendetta to please Trump knowing that reporters would be all over this once AT&T started complaining about the delay in approval. We’ll see.

Update: The plot thickens.