Ownership

A group of Democratic Sens is demanding answers from the Trump administration over news reports that the Department of Justice asked AT&T to sell CNN as a condition for allowing a merger between AT&T and Time Warner. Senate Judiciary Antitrust Subcommittee Ranking Member Amy Klobuchar (D-MN) and a group of fellow Democrats sent a letter Nov 10 to President Donald Trump and Assistant Attorney General Makan Delrahim over the possibility of "undue interference" by Trump in the agency's antitrust enforcement.

[Commentary] For over four decades, the Federal Communications Commission has restricted the ability of broadcast media outlets to also own newspapers, and vice versa, in the same market, under what is known as the newspaper-broadcast cross-ownership rule. This rule was established in 1975 with the stated purpose of preserving and promoting a diversity of viewpoints. Arguably, it made sense at the time. But with the internet now dominating the news landscape, the rule is no longer needed, and may actually be undermining the diversity of viewpoints it was intended to foster.

Demanding divestiture of either the must have content or the DIRECTV distribution platform is precisely the remedy you would expect if you believe the deal presents significant harm because of the vertical integration issues. That’s been the position of my employer, Public Knowledge, which has opposed the transaction since AT&T announced the deal. (That predates Trump’s election, for those of you wondering.) If you want a more detailed understanding of the theory of the harms, you can find it in my boss Gene Kimmelman’s testimony to Congress here.

[Commentary] The prospect of a president using antitrust law to punish political opponents is deeply disturbing. So when news emerged this week that the Justice Department had said that Time Warner or AT&T would have to sell properties like CNN or DirecTV before the department would approve their merger, it was widely taken as Mr. Trump’s revenge against CNN, the news network he loves to hate. It seemed to fit a classic “dirty tricks” narrative.

But should we so quickly conclude that the Justice Department is doing something wrong? Maybe not.

The Federal Communications Commission's grant the Merger and Divestiture Applications subject to certain conditions, and also grant the associated waivers on a temporary basis. The proposed transaction encompasses all of Entercom’s 127 and CBS’s 117 radio stations. Pursuant to an Agreement and Plan of Merger: (1) CBS Radio (CBSR) will be separated from CBS pursuant to a Master Separations Agreement; and (2) a wholly owned subsidiary of Entercom (Constitution Merger Sub Corp.) will merge with CBSR, with the merged CBSR surviving as a wholly owned subsidiary of Entercom.

This is a lousy deal that would raise prices and give AT&T way too much power. The Justice Department should reject it. Making AT&T sell must-have content properties like the Turner Networks and CNN, or even divest a nationwide video-distribution platform like DIRECTV, could be legitimate ways to soften the concentration harms if the deal goes through. While there are plenty of good reasons to oppose AT&T’s Time Warner takeover, punishing CNN for trying to hold this administration accountable isn’t one of them.

Will AT&T hang up on its quest for Time Warner if it can’t hang on to some of its most valuable assets? Answering that question could become paramount in the company’s effort to secure the $85 billion merger it proposed with Time Warner in October. Turner owns valuable sports rights, sharing with CBS the broadcast of the NCAA’s “March Madness” men’s basketball championship tournament. That event generated a record-setting $1.24 billion in national TV advertising in 2016, according to Kantar, a tracker of ad spending.

The Department of Justice and AT&T traded accusations Nov 8 over whether the company would have to sell off CNN, the cable network frequently feuding with President Trump, as a condition of its merger with Time Warner.  AT&T CEO Randall Stephenson flatly denied that his company had ever entertained the idea of selling CNN to win approval of the deal. “Until now, we’ve never commented on our discussions with the DOJ. But given DOJ’s statement this afternoon, it’s important to set the record straight,” said Stephenson.

Apparently, the Justice Department has called on AT&T and Time Warner to sell Turner Broadcasting, the group of cable channels that includes CNN, as a potential requirement for approving the companies’ pending $85.4 billion deal. The other possible way for the merger to win approval would be for AT&T to sell its DirecTV division, apparently.

[Commentary] As lawmakers grapple with the revelations regarding Russia’s manipulation of social media during the 2016 election, many are shocked to learn the outsized role that the major tech companies play in so many aspects of our lives. Not only do they guide what we see, read, and buy on a regular basis, but their dominance – specifically in the market of information – now requires that we consider their role in the integrity of our democracy. In my view, the size of these companies is not – in isolation – the problem.