Trump Is Right To Block ATT/Time Warner Merger, But For The Worst Reason

I guess we shouldn’t be shocked that Trump’s Justice Department has blocked the ATT/TimeWarner merger. As a supporter of stronger antitrust enforcement, and especially in the wake of the FCC’s decision to decimate net neutrality, I actually think that blocking the merger is the right thing to do. But let’s be clear, the Trump administration is doing this not out of principle but in order to punish CNN and once again attack and attempt to control the media that covers it.

The ATT/TimeWarner merger is what’s known as a vertical merger in that the two primary areas of business for each company do not dramatically overlap and cover different levels of the same industry. ATT is the second biggest wireless company and the third biggest broadband internet provider. In addition, it is the largest provider of pay TV due to its purchase of DirectTV. Essentially, ATT is a provider of communication pipelines. TimeWarner is primarily a content company with its ownership of CNN, HBO, Warner Brothers, TNT, TBS, Cartoon Network and Turner Classic Movies.  Put those two together and you have a company that controls the entire flow of information and entertainment from content development to delivery.

This arrangement, of course, provides a real incentive for ATT to price and/or package its offerings in a way that favors its own products. As one consumer advocate puts it, “There’s not even a question about whether AT&T’s TV packages are going to carry Time Warner programming, because of course they are. But that may be at the expense of viewers or competing programmers that might have something better, but aren’t even going to be considered.”

With the news that the FCC is planning on eliminating net neutrality, ATT could also actually legally degrade the delivery of competing products over its network or simply freeze competitors out entirely. This is what has already happened in the cable business. As an Optimum customer, it is impossible for me to get the Tennis Channel and Comcast only offers it as part of high-priced package in order to protect its own Golf and NBC Sports channels.

Of course, none of this is behind the DOJ’s decision to fight the merger. Kevin Drum has kindly put together James Hohmann’s seven reasons why Trump is probably ordering this decision to punish CNN:

• In every other area, the Trump administration is bending over backward to boost big business.
• The head of the antitrust division has changed his view on the issue to match the president’s.
• The administration’s denials are full of lawyerly language that leaves wiggle room.
• Trump has repeatedly demonstrated that he does not respect the independence of the Justice Department. Why would he prize the autonomy of the antitrust division any more than he did the FBI?
• There are no precedents for this kind of lawsuit succeeding.
• The president has made no secret of his deep personal disdain for CNN.
• White House officials have previously hinted that Trump might wade into the antitrust process.