Time Warner/AT&T Merger: No Sure Thing During Age of Trump

The telecommunications world is accustomed to big mergers. Two interesting things could be said of one of the biggest, the integration of Time Warner and AT&T. The first is that the deal is becoming more of a political football than previous mergers and acquisitions, due to President Trump’s beef with CNN, which is owned by Time Warner. The other is that the newly constituted AT&T, if indeed the deal closes, will take steps to separate its media and telecom interests.

Earlier this month, The New York Times reported on the $85.4 billion deal, which was announced in October 2016, describing a merger process that seemed to have lost all momentum. The president’s choice for attorney general in charge of anti-trust matters, Makan Delrham, has not been approved by the Senate. This tends to slow progress.

The bigger problem may be the president himself:

And Mr. Trump himself, who said during last year’s campaign that he opposed the deal, is another wild card. A senior administration official said last week that members of the White House were discussing how they might use their perch over the merger review as leverage over Time Warner’s news network, CNN.

The delay, the story suggests, could have ramifications beyond the deal itself. Other telecommunications companies would be forced to make moves if the deal closes. The pressure is less if it remains in limbo. The story suggests that the deal is ultimately expected to close because there is no direct competition between the two companies, but suggests that it is “potentially trickier from an antitrust perspective.” Time Warner is a content provider and AT&T provides cellular, satellite and wireline services.

The awkwardness of controlling infrastructure and programming is increasingly common. AT&T may be preemptively addressing it. Bloomberg reports that Chief Executive Officer Randall Stephenson will have a new role; he will oversee CEOs who will independently run the telecommunications and programming arms. The head of the media division with be John Stankey; John Donovan will head the networking arm.

The difficulty of merger politics seems greater than in previous administrations due to the volatility of the president. Trump’s base is on his side on the matter: Incompas and IMGE, described by The Hill as a trade group and a GOP polling firm, respectively, released a survey that found that 60 percent of “the president’s supporters said they agree with his campaign pledge to block the AT&T-Time Warner merger.” The percentage is 57 percent among all Republicans and 42 percent among all voters.

This all conceivably could be for naught. Nothing in Washington, D.C. works like it did during previous administrations. The desire of the president to bring CNN to heel may override all traditional considerations. That alone makes the fate of the deal more speculative than previous mergers.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.