According to reports from the New York Times, Financial Times, and Recode, the Department of Justice is asking AT&T to sell Turner, the broadcast TV arm of Time Warner that owns CNN, TBS, and other channels, as a requirement for AT&T’s acquisition of Time Warner. Another option put on the table was the sale of DirecTV, AT&T’s satellite TV division.
If AT&T fails to meet one of those conditions, it could take the DoJ to court in order to sue in order to get the deal through.
The inclusion of CNN as a potential requirement for deal approval is a troubling precedent for the Trump administration. President Trump has personally gone to pains to single out the “Fake News” CNN on a number of occasions, going as far as tweeting out a photoshopped image of him body-slamming the network. A sale of CNN would likely decrease the network’s reach, as it would have to re-negotiate deals to be included in cable packages, likely at a lower rate.
From a consumer perspective, there isn’t a lot to like about the AT&T-Time Warner deal to begin with. A merger would combine control of a huge cable network with the company that makes much of the content that gets distributed over cable networks.
“When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios. For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market,” AT&T said in a statement addressing rumors of DoJ intervention last week. “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.” ”
While it’s true that vertical integration — two companies that participate in the same market but don’t directly compete — is better than two cable companies merging, the notion that it will benefit consumers is dubious. AT&T would contend that integration can lower costs, which could be passed on as cheaper plans to consumers. However, AT&T owning entertainment all the way from content creation to delivery to customers’ eyeballs gives the company immense power that it can use to make market entry difficult for competitors. For example, AT&T is already offering free HBO to wireless subscribers.