The Trump administration may be leveraging the powers of federal agencies to damage CNN, at least that’s how the narrative goes. Closer examination reveals an unregulated landscape rife with lawsuits, takeovers and network control.
On Monday, AT&T CEO Randall Stephenson met with Makan Delrahim, the Justice Department’s new anti-trust chief confirmed by the Senate in late September, to discuss the company’s acquisition of Time Warner. According to three people briefed on the conversation, Delrahim told Stephenson that if AT&T wanted the Justice Department to green-light the merger, he would have to either sell Turner Broadcasting, the parent entity of CNN, or DirecTV, the satellite provider AT&T acquired in 2015.
“Until now, we’ve never commented on our discussions with the D.O.J. But given D.O.J.’s statement this afternoon, it’s important to set the record straight,” a spokesperson for Stephenson told outlets. “Throughout this process, I have never offered to sell CNN and have no intention of doing so.”
Sources at CNN and AT&T told Vanity Fair the merger might be blocked for political reasons, citing Trump’s public feuds with CNN, and that Stephenson intends to fight the Justice Department through the legal system. But many experts believe this political narrative masks the merger’s far-reaching ramifications across the media landscape.
“There is a theory of the case based on vertical foreclosure and concerns about media concentration that may lead to too few voices and preference for the merged firms’s products,” Eleanor M. Fox, New York University Law professor of Trade Regulation, told Observer. “That theory is not consistent with a more traditional laissez faire policy.”
Mega-mergers are by no means new. In 2000, Time Warner acquired America Online for a staggering $165 billion, later writing off nearly $99 billion in losses. At the time, it was hailed as a merger between equals where content owners could merge with content distributors; regulators did not envision the kind of power such a company could wield over information. As the Internet became the medium of choice, proliferated by tablets and phones with video and Internet access, the media distribution and content creation landscape changed, along with the public and regulatory experience.
Under the Obama administration, a new standard for vertical integration emerged following the approval of Comcast’s 2009 acquisition of NBC Universal: Giant content distributors could acquire giant content creators, but only under conditions set by the Justice Department. However, federal regulators have accused Comcast of regularly violating these parameters, and the company has been forced to pay hundreds of thousands of dollars in fines to the F.C.C.
The AT&T-Time Warner merger would create a combined company with wireless and broadband Internet services (AT&T), movie studios (Warner Brothers), cable providers (DirecTV), premium cable channels (HBO), news networks (CNN), and sports networks (NBA on TNT). AT&T-Time Warner could withhold these channels from other broadband providers like Verizon, blocking customers from viewing content independent from their infrastructure.
To prevent what happened with Comcast, the Justice Department is trying to head complications off beforehand by forcing the sale of either Turner Properties from Time Warner or DirecTV from AT&T.
“I can now say that the timing of the closing of the deal is now uncertain,” AT&T CFO John Stephens acknowledged at an investor conference on Wednesday.
With talks of a FOX-Disney merger, Discovery Communication’ $12 billion acquisition of Scripps Networks, and Sinclair Broadcast Group’s attempts to acquire Tribune Media, the media landscape is undergoing a massive transition amid rapid changes in how people consume content, leaving the government to play catch up. In a Thursday op-ed for the New York Times, F.C.C. chairman Aijit Pai states, “Media ownership rules presume the marketplace for news is defined entirely by pulp, rabbit ears and transistor radios. In this archaic world, Americans get their news only from newspapers and broadcast television and radio stations, and the internet doesn’t exist.”
An AT&T-Time Warner merger needs to be discussed in terms of the role corporations play on information distribution; partisan hit pieces framed as Trump versus CNN distract from the larger issue of consolidated corporatism. Those railing against a totalitarian state under Trump would be best served to re-visit their roots in decrying an unregulated free market.
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