Report Claims Trump Pushed For AT&T Time Warner DOJ Lawsuit To Hurt CNN, Help Rupert Murdoch

from the old-boys-club dept

The late 2017 DOJ announcement that it would be suing to stop AT&T's $86 billion merger with Time Warner turned more than a few heads. While the DOJ insisted that the move was driven entirely by an interest in protecting consumers, the decision was utterly discordant with the Trump administration's often facts-optional assault on consumer protections with bipartisan support, ranging from net neutrality to basic environmental protections. And the DOJ's sudden concern about the impact of media consolidation was in stark contrast to Trump's FCC, where demolishing decades-old media consolidation rules has been a top priority.

At the time of the lawsuit, many wondered if some other motivations were really at play. After all, Rupert Murdoch had been pushing Trump for more than a year to scuttle the deal for anti-competitive reasons. Time Warner rejected a News Corp. acquisition offer in 2014, and more recently AT&T rebuffed the company's attempt to buy CNN... twice. Time Warner employees quoted at the time believed Murdoch was the driving motivation for the political pressure to quash the deal:

"According to executives I spoke with, the theory is that Murdoch privately encouraged Trump to scuttle the deal as revenge for Time Warner rejecting Murdoch’s $80 billion takeover offer in 2014. “A direct competitor, who was spurned from buying us, perhaps is trying to influence the judicial process? That’s corruption on top of corruption,” one Time Warner executive told me."

No hard evidence has proven any such connection, though if it were true, it's hard to think anybody involved in such an effort would put of of it in writing.

Another unproven theory generally gained more widespread public acceptance: that Trump had pressured the DOJ to intervene in the deal because of Time Warner-owned CNN's critical coverage of Trump. That obviously raised a lot of First Amendment questions about whether the President was pressing a government agency to help hamstring or otherwise silence a critic.

Trump and the DOJ repeatedly stated that Trump played no role in the the pressure for the suit. And Trump himself repeatedly stated he was "not going to get involved" in the case. Yet a New Yorker piece this week quotes sources who say that promise was never actually adhered to:

"...in the late summer of 2017, a few months before the Justice Department filed suit, Trump ordered Gary Cohn, then the director of the National Economic Council, to pressure the Justice Department to intervene. According to a well-informed source, Trump called Cohn into the Oval Office along with John Kelly, who had just become the chief of staff, and said in exasperation to Kelly, “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened! I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked!" Cohn, a former president of Goldman Sachs, evidently understood that it would be highly improper for a President to use the Justice Department to undermine two of the most powerful companies in the country as punishment for unfavorable news coverage, and as a reward for a competing news organization that boosted him. According to the source, as Cohn walked out of the meeting he told Kelly, “Don’t you fucking dare call the Justice Department. We are not going to do business that way."

Whether that was the end of it isn't clear. I'll note that many consumer advocates I've spoken to over the last few years believe that the DOJ under Makan Delrahim genuinely believed it was doing the right thing in challenging the suit. That of course doesn't mean Trump and Murdoch didn't try hard all the same. The piece also quotes former government insiders like Blair Levin, who ponders whether Murdoch was an architect of Trump's ire toward the deal:

"Blair Levin, the former F.C.C. official, told me, “There may be innocent explanations.” But, he adds, “Trump famously said you’re going to get sick and tired of winning, and that may not be true for the rest of America, but it sure is true of Murdoch.” He says of Murdoch, “He’s an incredibly cunning political player. He leaves no fingerprints. He’s been in the game of influencing government behavior to his benefit longer than most of us have been alive."

Of course hunches, theories, and anonymous sources aren't proof. And it remains possible that the DOJ under Makan Delrahim was just suddenly and genuinely concerned about vertical integration. Still, that flies in the face of everything the Trump administration (and particularly his friend Ajit Pai at the FCC) has stood for as they've worked tirelessly to make it easier for giant companies and broadcasters to merge. And it seems entirely possible that having been rebuffed by AT&T twice, Murdoch hoped the DOJ would win its case and force AT&T to sell off CNN to News Corporation. All under the guise of consumer protection.

If this all really was Murdoch gamesmanship, it ended in a remarkable face plant. The DOJ not only lost its initial case challenging the merger, it recently lost on appeal. In part because decades of lobbying have weakened antitrust, making it harder than ever for DOJ lawyers to make even the most obvious of points (in this case that AT&T would quickly raise its competitors prices for must have content, something that occurred before the ink deal was even dry).

The DOJ also failed because it refused to draw attention to net neutrality. The elimination of net neutrality by the Trump FCC opened the door wide to AT&T abusing its role as network operator to hamstring its competitors, most notably by only applying usage caps and overage fees on users that use competing streaming services. But the DOJ didn't mention net neutrality once during the trial, likely in part because it would have only highlighted the FCC's culpability in making this megamerger even more problematic than it already was.

Congress is still investigating whether politics and personal gain played a starring role in the Trump administration's sudden, uncharacteristic concern about monopoly power. One gets the sneaking suspicion there will be more details forthcoming.

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Filed Under: antitrust, doj, donald trump, gary cohn, john kelly, mergers, rupert murdoch

Companies: at&t, cnn, fox, time warner