Trump's Scorn of CNN and Why It's an Antitrust Issue: QuickTake

(Bloomberg) -- Long before federal antitrust officials sued to stop AT&T Inc.’s takeover of Time Warner Inc., their ultimate boss -- the president -- weighed in. While a candidate, Donald Trump said his administration wouldn’t approve an AT&T-Time Warner marriage because that would put "too much concentration of power in the hands of too few." As president, he’s kept up a running barrage of complaints and insults directed at Time Warner’s cable news network, CNN. Now, AT&T and Time Warner are trying to show that Trump’s animus is behind the government’s attempts to block their deal.

1. Is Trump trying to scuttle the merger?

Not in any official way. A president doesn’t have direct authority to stop a proposed merger. It was the Justice Department’s antitrust division that filed the Nov. 20 lawsuit challenging the deal. Officials reasoned it would lead to higher bills for consumers and less innovation in the industry. The combined company, for example, could use its control over programming like CNN and the Home Box Office entertainment channel to squeeze rival providers who want to offer those services, they concluded. AT&T has signaled that it will attempt to show that Trump’s influence led to the decision by his appointee at the antitrust division, Makan Delrahim, to challenge the merger.

2. What exactly has Trump said?

"As an example of the power structure I’m fighting," he said in an Oct. 22, 2016, campaign visit to Gettysburg, Pennsylvania, "AT&T is buying Time Warner and thus CNN -- a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few." On Jan. 17, days before taking office, Trump said of the proposed merger in an interview with Axios: "I have been on the record in the past of saying it’s too big and we have to keep competition. So, but other than that, I haven’t, you know, I haven’t seen any of the facts, yet." The dislike of CNN that Trump showed as a candidate has only deepened. As president, via Twitter, he’s called the network "fake news," "ratings challenged," "garbage journalism" and "the least trusted name in news."

3. Can AT&T show Trump tried to influence the case?

It’s going to try, though there’s no public evidence that Trump or anyone at the White House interfered. The company sought communications between the Justice Department and the White House about the deal and also wants to put Delrahim on the witness stand, which, if approved by the judge, would be highly unusual. Delrahim told reporters on Feb. 16 that he and Trump never discussed the proposed merger. That same day, a Justice Department lawyer, Craig Conrath, said in court that Trump’s antipathy toward CNN shouldn’t be "a get-out-of-jail-free card" for an "illegal merger.” One possible wild card is a Jan. 12, 2017, meeting at Trump Tower between the then-president-elect and AT&T officials, including Chief Executive Officer Randall Stephenson.

4. What happened in that meeting?

AT&T said the conversation touched on job creation, investment and competition, rather than on the Time Warner merger then on the table. Even so, the closed-door meeting set off alarms inside the Justice Department, where attorneys in the antitrust division are usually given a wide berth to render an independent judgment based on the merits and the law -- free even from the appearance of political pressure from above.

5. Are Trump’s tweets enough to taint the government’s case?

That’s a question that would be up to the judge in the case. In at least one other legal dispute -- over Trump’s efforts to limit immigration from certain countries -- judges have cited Trump’s public comments as a reason to doubt the merits of his proposals. When eight antitrust experts weighed in to Vox.com, they split almost evenly over whether Trump’s comments might affect the outcome of the case. "A judge who suspects this is really a political vendetta might be less willing to go out on a limb to rule for the government, even if the government ought to win on the merits," said one of those surveyed, Stanford Law School Professor Mark Lemley.

6. Has a president ever intervened in an antitrust matter?

According to biographer Robert Caro, Lyndon Johnson in 1963 won a promise of support from the Houston Chronicle by threatening to block approval of a merger between two Houston banks, one of which was led by the newspaper’s president.

The Reference Shelf

• A Bloomberg View editorial said the Justice Department is departing from "standard practice" in its approach to the deal.
• Time Warner’s content factory might be key to AT&T’s survival.
• AT&T has ambitious post-merger plans for CNN.
• A QuickTake explainer on new concerns about vertical mergers.

--With assistance from Todd Shields

To contact the reporters on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net, Laurence Arnold in Washington at larnold4@bloomberg.net.

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Paula Dwyer

©2018 Bloomberg L.P.