News and Analysis:
Bloomberg News is reporting today that President-elect Donald Trump has told “a friend” that he still opposes the AT&T-Time Warner merger. The news sent media stocks down, particularly Time Warner.
Trump said during the 2016 campaign that he opposes the deal because he thinks it will put too much power in the hands of one company, AT&T. However, since his surprise election, industry consensus has been that Trump would reverse his position, and be favorable to industry mergers in general.
The Financial Times reported that Trump’s transition team even assured AT&T officials that his campaign pledge to oppose the merger was not set in stone.
So what’s the reality here? Will Trump support AT&T-Time Warner or not?
It says here that it largely depends on CNN. Yes, CNN, which is owned by Time Warner.
Trump has had a love-hate relationship (mostly hate of late) with the news network for some time. He has repeatedly tweeted, said, and written that he believes CNN has a liberal bias, and is unfair to him and his campaign. So you might think Trump would reject the AT&T-Time Warner merger for spite, if no other reason.
But while Trump may be a politician now, he’s still a businessman at heart. And any good businessman knows that you don’t commit yourself to a position until you know what you can get in return.
I believe Trump is purposely signaling now (just 15 days before he takes office) that he might oppose the merger to exert pressure on CNN to deliver more favorable coverage.
Trump knows that CNN is in a tough position. While CNN is overflowing with journalists who detest Trump (don’t deny it, guys and gals), the network’s brass may have a different view, not for political reasons, but financial ones.
You see, Time Warner CEO Jeff Bewkes stands to gain more than $30 million if the merger is approved. $30 million. How do you think Bewkes will feel about CNN’s top executives if the merger is rejected because Trump thought the network was unfair to him?
How would you feel?
So it says here that Trump will play AT&T and Time Warner for all they are worth. If CNN gets on board — and AT&T and Time Warner offer a few other concessions — he will instruct his underlings to approve the deal. If not, he will reject it, not because of principle, but because of pique.
— Phillip Swann