AT&T’s planned merger with Time Warner has far-reaching implications, not just for the two US companies, but for the broader media landscape. And it could all come down to CNN.
The US Department of Justice—the nation’s antitrust authority—told AT&T it will not sign off on the deal unless the company sells the Time Warner-owned cable-TV news network, the Financial Times reported (paywall). That’s reportedly one of two conditions AT&T was told it needs to meet. (All the more interesting as Donald Trump labels CNN “fake news” that does not cover him fairly. He dubbed it the “Clinton News Network” during his 2016 campaign.) Though CNBC reported Justice Department sources said they wanted CNN to sell either CNN’s parent company Turner Broadcasting, or satellite-TV provider DirecTV:
The plan to merge Time Warner’s content production and channels assets, including, HBO and Warner Bros., with AT&T’s distribution pipeline is a game changer for the media world.
Right now, we’re mostly seeing media companies buy other media companies to grow their content assets and improve distribution, like Discovery’s deal to buy Scripps Networks, or Disney’s talks to buy part of 21st Century Fox.
But more tech and telecom players are also getting in the content game. Amazon, Apple, Facebook, and Verizon are all becoming bonafide video companies. And they need strong content producers, like a Time Warner, to shore up their programming slates.
In the next wave of deals, we’ll “start seeing the blurring of entertainment and tech,” Greg Portell, a partner at management consulting firm A.T. Kearney, told Quartz earlier this week. However, all of that effectively hinges on the AT&T-Time Warner deal going through. Companies aren’t likely to move forward with any other big cross-industry mergers until they see how it shakes out with regulators.
“Resolving the AT&T-Time Warner situation will be important. That will clear the stage for the next round of big competitive moves,” said Portell. “Until that gets blessing and finalized a lot of the cross industry deals probably are going to be on hold.”
That leaves any big media and tech deals on the back-burner for now. Given the DOJ’s focus on CNN, cross-sector mergers involving news outlets are the most likely to be affected. Portell, for his part, said the DOJ’s focus on CNN “seems a bit out of synch,” in a follow up email to Quartz today.
“CNN is a meaningful part of the [Time Warner] portfolio,” Portell said, “but it is hard to see how it overlaps with AT&T’s profile in a way that equates ownership to anti-competitive potential. From the outside, it is hard to put the finger on the conflict.”