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AT&T

Over the past day, we've seen a flurry of stories on the Section of Justice's position on the AT&T/Time Warner cable merger, which was showtime announced dorsum in Oct 2016. This story has been bouncing back and forth a fair bit, with diverse claims from multiple parties. Here'due south what nosotros know thus far.

First, Reuters reported that the Department of Justice was threatening to scuttle the proposed AT&T/Time Warner deal unless AT&T agreed to sell off either Turner Dissemination, which owns CNN, or DirecTV. The aforementioned source said AT&T had offered to sell just CNN, rather than divesting the entire unit.

AT&T'southward CEO, Randall Stephenson, denied this written report, saying: "Until now, we've never commented on our discussions with the DOJ," Stephenson said in a statement. "But given DOJ'south statement this afternoon, it'due south important to set the tape straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so."

CNBC besides reports hearing that AT&T specifically offered to sell CNN–and just CNN–at a coming together this past Mon, but that the Department of Justice rejected the idea because it wouldn't solve the department's regulatory concerns about allowing the two enormous companies to integrate.

ReCode points out out that nosotros're seeing something of an changeabout from the head of antitrust investigations at the Department of Justice on the topic. In 2016, antitrust expert Makan Delrahim, a law professor at Pepperdine Academy, was confident that in that location were no large worries well-nigh the deal, which represents a vertical merger between two companies with a more diversified portfolio of interests than a horizontal merger between 2 companies in the same field. Today, as the head of antitrust regulation appointed past Donald Trump, Delrahim has been more cautious.

Delrahim

Makan Delrahim.

Recode draws a stiff link between President Trump's oft-stated dislike for CNN and the DOJ's reported demand that AT&T sell either Turner Broadcasting or DirecTV equally a condition for approving the merger. This is admittedly possible: Trump has shown a marked willingness to inject his own opinions and commentary on diverse matters where past presidents were unwilling to tread. Merely it'south far from the only explanation.

While the revolving door between industries and the government employees responsible for regulating those industries has been a problem for decades, Delrahim wouldn't be the first government official to adopt different views when he transitioned to a high-level position. Before his confirmation, old FDC chair Tom Wheeler was derided by many as a stooge of the cable companies and telcos in general. Once in office, he proved himself a champion of reducing broadband costs and improving speeds across the country, including oft-neglected rural areas. And so again, opposing these kinds of mergers also breaks with the GOP'due south typical approach, and Trump hasn't exactly established a reputation for trust-busting in his starting time 10 months in part. It's not clear, yet, what's driving the DOJ's arguments.

Finally, the Department of Justice has said that selling CNN "would non solve antitrust concerns" about the AT&T and Time Warner merger. Of all the statements released thus far, this is the virtually meaningless. No 1 has reported that the sale of Turner Dissemination or DirecTV as the condition to approve a merger. They've reported it as a condition of a merger. Nigh mergers incorporate a range of agreed-upon requirements, whether that means taking steps to ensure that the market place for TV remains competitive, guaranteeing low-price packages are available to consumers in areas with limited-to-no contest, or (in other cases) stipulating that an Internet access provider buying another Isp still offers affordable services.

Furthermore, Reuters reports the DOJ referring specifically to the CNN upshot, which would however be accurate if the Department of Justice said, "You need to sell Turner Broadcasting" and AT&T responded with "How most just CNN?" You can contend that Delrahim is pushing to slice off Turner Broadcasting because he needs political encompass for what would otherwise be an absurdly overt attempt to punish the coverage of a network the president dislikes. Or you tin contend that the Department of Justice has legitimate antitrust concerns that spinning off Turner Broadcasting would address. Merely no one is saying that the DOJ avant-garde the CNN statement and by refuting the idea in those terms, the officials Reuters spoke to are denying something the earlier Reuters story didn't accelerate. Information technology'south a bog standard PR flim-flam. Don't autumn for it.

The Atlantic also has a fairly good writeup on this outcome besides. Information technology notes that the DOJ could be concerned about the concentration of media power in a merged AT&T / Time Warner and that this is the proximate cause of the need that the company divest from CNN. This is echoed in a more recent update from the DOJ via Reuters, which notes that antitrust regulators recollect a combined company could limit the ability of "innovative new technologies to evangelize content to consumers."

I'm generally confronting connected mergers and acquisitions. We're already living in an era that rivals the Gilded Historic period for concentrated corporate power. The head of the FTC, Ajit Pai, has literally claimed that businesses in areas with just i broadband provider can exist considered competitive if some other provider exists within a half mile, fifty-fifty if the second provider offers no service to the business in question. There are good reasons to be skeptical of this deal that have nothing to do with President Trump. Until we know the DOJ's public motivations and arguments, we won't exist able to depict a firm conclusion on the motivations behind the Section of Justice's reluctance to certify the merger.