Has Trump's Intimidation Power Affected The AT&T-Time Warner Merger? | KUOW News and Information

Has Trump's Intimidation Power Affected The AT&T-Time Warner Merger?

Nov 9, 2017
Originally published on November 9, 2017 10:27 am
Copyright 2017 NPR. To see more, visit http://www.npr.org/.

RACHEL MARTIN, HOST:

President Trump has made it very clear how he feels about CNN.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: Fake news. CNN. Fake.

MARTIN: So we know that. But here's where things get murky. CNN is at the center of a huge antitrust dispute involving the federal government. AT&T wants to buy CNN's parent company, Time Warner. And the Department of Justice says before it approves that deal, AT&T would need to either sell off CNN or its other big property, DirecTV. Our media correspondent David Folkenflik has been following all this, and he's on the line. Hi, David.

DAVID FOLKENFLIK, BYLINE: Good morning, Rachel.

MARTIN: Remind us why AT&T wants to buy Time Warner in the first place.

FOLKENFLIK: Well, this is an example of what's called vertical integration. These two companies don't exactly compete with each other. They kind of complement each other. AT&T has these platforms. You know, you've got mobile, telephone, and you've got DirecTV, a satellite TV provider, and it wants content to pump out on these platforms. And Time Warner owns Warner Bros. Studios, it owns HBO, and it also owns Turner Broadcasting, which has a lot of TV channels on cable that half of which seem to show "Law And Order" at any one time, but that includes CNN, and that's really the sticking point here.

MARTIN: So what's the argument from the Department of Justice? Why are they opposing it?

FOLKENFLIK: Well, let's be clear. The Department of Justice is not commenting, essentially. And they've had to put out some statements in the last 24 hours in result to criticism over the perceived reasons for this. There are some reasons why even so-called vertical integration, which tends not to raise the antenna of regulators, can be a problem. You've got a consolidation of so much, many media properties in the entertainment business. You know, it raises concerns about how few actors are going to be left negotiating or creating or deciding price points for it for the consumer. But, you know, I talked to one of the top antitrust legal observers in the country, a guy named Herbert Hovenkamp at University of Pennsylvania Law School. He says he doesn't understand the rationale here.

MARTIN: So has the White House said anything about this?

FOLKENFLIK: It has said only that President Trump hasn't gotten involved in this, that there's been no untoward contact. I think one of the real fears here is that President Trump is getting involved, that it's pursuing a political pressure against CNN because of the critical coverage that CNN has provided and that President Trump has not only joked about as fake news but has angrily denounced, you know, at a presidential press conference in Poland, at political rallies around the country. CNN has been a real anger point, flashpoint for this president.

MARTIN: So while this is a significant merger, you said it's the kind of thing that wouldn't necessarily raise anyone's antenna. So I mean, are the parties involved here surprised that this whole thing has become so controversial?

FOLKENFLIK: Well, I talked to sources within Turner Broadcasting and CNN yesterday. You know, they're pointing to the fact that essentially, over the last 40 years, the Justice Department has not blocked, you know, these so-called vertical integration, that is, these mergers of companies that are not truly competitors. They say that this is a real shock and that it's a reversal of policy. You might have expected this from a more activist, Democratic organization, but the Trump administration has basically been sweeping aside roadblocks to major corporate actions, even in media when it looks like Sinclair is taking over Tribune TV stations. This looks like to a lot of people that the Trump administration is involved because of CNN's presence in this deal.

MARTIN: NPR's David Folkenflik reporting this morning. Thanks so much, David.

FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.