AT&T CEO Floated CNN Sale to Ease U.S. Concerns on Time Warner
(Bloomberg) -- AT&T Inc. Chief Executive Officer Randall Stephenson floated the idea of selling CNN when he met with U.S. antitrust officials last year in an attempt to head off a government lawsuit challenging the company’s proposed takeover of Time Warner Inc., according to a deposition.
Stephenson raised the possibility of selling CNN during a November meeting with the Justice Department’s antitrust chief, Makan Delrahim, according to the CEO’s deposition cited by the government in a court filing Thursday. The conversation revealed in the filing clashes with Stephenson’s public statements at the time that he wasn’t willing to sell the news network to resolve U.S. concerns over the Time Warner deal.
Stephenson recounted the exchange during a deposition before the government’s lawsuit seeking to block the deal went to trial. Stephenson has disputed he ever offered to sell CNN to resolve the government’s concerns about the proposed merger.
According to a transcript, he was questioned by a Justice Department lawyer about the meeting with Delrahim.
“And during that meeting, you raised the subject of CNN?” the Justice Department lawyer said.
“I did,” Stephenson said.
“OK. And you were the first one to raise the subject of CNN?”
“Oh, yeah,” said Stephenson, who went on to say, “I asked Mr. Delrahim, I think my language, this will be pretty close: ‘If I were to walk in here tomorrow and tell you I had gotten my head around selling CNN, would that allow you to wave this deal through?’ And he said, unequivocally, ‘No.’”
To the Justice Department, that was a proposal to sell, the government said. The U.S. cited the deposition in its appeal to reverse a judge’s ruling this year allowing AT&T to buy Time Warner. Included in the filing is a link to an excerpt of Stephenson’s deposition posted on the Justice Department’s website.
Stephenson wasn’t offering to sell CNN in the meeting with Delrahim, according to a person familiar with the case. Instead, he was trying to understand the Justice Department’s core problem with the proposed merger given that similar deals had been resolved in the past without requiring asset sales, the person said.
AT&T declined to comment.
CNN was a flashpoint in the government’s challenge to AT&T’s takeover of Time Warner, which owns the network. President Donald Trump had long accused the network of bias and his relentless criticism had sparked speculation, including from AT&T, that the lawsuit was politically motivated. Delrahim denied that. In a declaration included in the court filing, he said CNN’s news coverage played no role in the decision to file the lawsuit.
The government lost its lawsuit in June when a federal judge in Washington rejected the argument that the deal would lead to higher prices for pay-TV subscribers. The U.S. is now appealing the decision and will argue its position before a three-judge panel in Washington. A hearing date hasn’t been set.
Stephenson said in the deposition there were reasons to wonder whether Trump’s animus toward CNN was driving the Justice Department’s opposition to the deal. Delrahim had said he didn’t see a "major antitrust problem" with it after the merger was announced and before he became chief of the antitrust division.
“This is such a change in approach for the antitrust division, that also causes one to wonder why would Mr. Delrahim change his position so markedly after assuming the role in antitrust?” Stephenson said. “It just is something that causes me to question a lot about what’s -- what’s the motivation.”
Shortly after the meeting with Delrahim, Stephenson said he didn’t propose selling the network to the Justice Department.
“Throughout this process, I have never offered to sell CNN and have no intention of doing so,” he said.
The U.S. says the ruling to approve the deal was wrong in part because U.S. District Judge Richard Leon ignored the core argument that Time Warner would gain bargaining power over rival pay-TV distributors that pay for its programming. That leverage would lead to higher prices for Time Warner content and increase bills for subscribers, the government says.
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