Until last week, it was expected that AT&T’s pending $85.4 billion mega acquisition of Time Warner would close by the end of the year. After almost a year of review, however, the Justice Department has cast doubt on the deal. Late last week, in meetings with AT&T, the Justice Department pressured AT&T to sell Time Warner’s Turner Broadcasting division, which owns cable channels and most significantly CNN, or to divest the DirecTV satellite service — as a potential requirement to win government approval. Given the Trump administration’s anti-media agenda, in particular the President himself repeatedly hammering the cable channel CNN as “fake news”, it is not a shock that such proposed remedy of the DoJ was widely taken as Mr. Trump’s “dirty tricks” to smash down his political opponents.
Despite all the suspicion of Trump’s improper interference, there are legitimate arguments that can be made against the deal. Back in July, AT&T executives announced that they would be in charge of the combined company following reorganization, foreshadowing the ouster of Time Warner executives in deal matters and transition planning. Antitrust experts believe that the Time Warner – AT&T deal would be anticompetitive. By leveraging its control over Time Warner’s content and the distribution, AT&T could squeeze out rival distributors, denying them access or charging high prices for Time Warner content. Tim Wu, the professor at Columbia Law School who strongly opposed the withdrawn merger of Comcast and Time Warner Cable in 2015, pointed out,“[m]ergers that marry companies that produce content with those that distribute it create new ways to keep newcomers at bay.”
The disposal of the Turner division proposed by the DoJ is a sweeping demand, as Turner takes up a third of Time Warner’s revenues, much bigger than its premium channel HBO and not much smaller than its Warner Bros movie studio. No wonder Randall Stephenson, chief executive of the telecoms company, said on Thursday at the Dealbook conference in New York, “there is no intention of selling CNN”.
Ying Li is an Entertainment Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current L.L.M. student at Harvard Law School (Class of 2018).