What We’re Reading: CNN and the AT&T/Time Warner Merger

by in Business

News broke today that the Justice Department may be pumping the brakes on AT&T’s planned acquisition of Time Warner Cable, after the Financial Times reported that regulators may demand that Time Warner sell CNN before the merger is approved.

The plan, which has been in the works for the last year, was expected to breeze through federal regulators. Vertical integration — the combination of companies from separate industries — are generally significantly easier to get approved than horizontal integration plans, which threaten monopoly.

The merger is one in a growing trend of distributors and content-producers pairing up. (For more background check out MediaFile’s story on the merger from last year).

The story, like the proposed $85 billion deal itself, is big, and has potentially troubling political and legal implications for the Trump administration.

Here’s what we’re reading for the latest:

First, there are concerns from more than a few legal experts that the Trump Administration may be using the Justice Department to punish CNN for what it views as unfavorable coverage. As Slate’s Ben Mathis-Lilly points out, such an apparent abuse of executive power would “constitute a low moment in American history as far as free speech and encroaching authoritarianism.”

The New York Times has more about potential deals regulators have put on the table for Time Warner and AT&T to decide on — which, in addition to the requirement to sell off CNN, could include an option to sell of DirectTV instead. AT&T’s CEO Randall Stephenson, however, is fighting back, after the DOJ argued that AT&T had independently offered to sell CNN. Stephenson said, “I have never offered to sell CNN and have no intention of doing so.”

Meanwhile, the stock market reflected the concern about Time Warner’s uncertain future. The company closed 88 points down. If the decision of the regulators becomes final, the companies are prepared to go to court — and with fair chances of winning.

Of course, there’s always the chance that the Trump Administration has legitimate reason for delaying the merger. As this op-ed from Senator Al Franken (D-MN) points out, having the largest content producer merged with the largest content distributor could be problematic for consumers.

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