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Trump's reasons for trying to block AT&T's purchase of Time Warner were all personal

Published: Mar 04, 2019, 9:27 PM

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Trump's reasons for trying to block AT&T's purchase of Time Warner were all personal

Something strange was going on behind the scenes after U.S. District Judge Richard Leon ruled last June that AT&T could close on its $85.4 billion purchase of Time Warner. The Justice Department decided not to appeal the deal's approval and the transaction closed the next week. Judge Leon warned the DOJ not to appeal his decision. Yet, three weeks later, the Justice Department decided to appeal the ruling after all.

So what happened? According to a new report in the New Yorker (via Ars Technica), President Donald Trump made it clear that he didn't want the transaction to close. Trump wanted to get personally involved with the Justice Department's review so that he could block the deal. This wasn't due to any economic theory, or worries about competition. Trump was upset because Time Warner owns CNN, and the president did not like the way the cable news station covered his presidency. The magazine says that Trump told his staff that he wanted the deal blocked, but his staff refused to get involved.

"[I]n 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 50 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."-Excerpt from New Yorker Magazine

Before the election, candidate Trump vowed to block the deal

Besides the inclusion of CNN in the transaction, there was another reason why Trump was against the deal. Back in 2014, 21st Century Fox tried to purchase Time Warner, but failed to do so. Fox chairman Rupert Murdoch, who has a friendly relationship with the president, didn't want AT&T to purchase the assets that he had wanted to buy a few years ago and asked AT&T CEO Randall Stephenson a couple of times if he would sell CNN to him.

When the deal was first announced in October 2016, then candidate Trump said, ", "It's too much concentration of power in the hands of too few." He vowed to block the transaction if he won the election. The deal brought AT&T a treasure trove of content including the Warner Brothers movie studio, which includes the wildly successful Harry Potter and Batman franchises and the Warner Brothers cartoons. It also gave AT&T cable properties CNN, HBO, TBS and TNT, along with 10% of streaming video service Hulu.

The day after AT&T closed on its purchase of Time Warner, the company announced plans for a new app called Watch TV that costs $15 a month after a seven day free trial. It offers live streaming from over 35 channels, and a ton of on-demand content. Much of the programming comes from the cable properties that AT&T acquired from Time Warner. The app is available for both iOS and Android users.

Luckily for AT&T (and arguably its subscribers), there were well-placed Trump staffers who realized that the president's dislike of CNN's coverage and his loyalty to conservative billionaires like Murdoch were not legitimate reasons to block the deal from closing.

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Alan, an ardent smartphone enthusiast and a veteran writer at PhoneArena since 2009, has witnessed and chronicled the transformative years of mobile technology. Owning iconic phones from the original iPhone to the iPhone 15 Pro Max, he has seen smartphones evolve into a global phenomenon. Beyond smartphones, Alan has covered the emergence of tablets, smartwatches, and smart speakers.