It’s natural to believe that Donald Trump runs the government as a personal self-aggrandizement machine with an eye toward rewarding friends and punishing enemies. We have enough case studies reinforcing that belief. But this perception can also be a curse, with the appearance of impropriety overwhelming all policy decisions, even ones that miraculously appear to be half-decent.
That’s what’s going on with the breathless news stories around the proposed $85.4 billion merger between AT&T and Time Warner, creating an integrated conglomerate in telecommunications and entertainment. The Financial Times reported yesterday that Trump’s Justice Department demanded that AT&T sell off CNN, a network Trump has targeted as “fake news,” as a condition of the merger. “It’s all about CNN,” said the anonymous leaker. And pundits jumped on this narrative—almost certainly introduced by AT&T and its allies—to lament the rise of government-by-vendetta and the end of the free press as we know it. Even lawmakers got into the act, expressing concern.
Later reports showed this to be untrue. The Justice Department offered AT&T two choices: Sell Turner Broadcasting, a collection of over a dozen stations of which CNN is only a part, or sell off DirecTV, AT&T’s satellite-television distributor. If one of the options for AT&T involves keeping CNN, I don’t know how “it’s all about CNN” could be true. AT&T’s CEO Randall Stephenson further muddied the waters by saying today, “I have never been told that the price of getting deal done was selling CNN.”
Why would the Justice Department require this divestment? The answer goes back to why this merger is terrible for consumers and the media industry as a whole.
You may be aware that we have a terribly consolidated telecommunications landscape. Cable, broadband, and wireless services have fallen into fewer and fewer hands. In most of the country, people have just one choice for their cable or broadband provider. And these distribution monopolies want to control the monopolies that produce the content.
Back in 2009, the cable company Comcast announced the purchase of NBC Universal. And the fear there was all about vertical integration. If a cable provider owned a bunch of networks and movie studios, it could use its dominance in distribution to favor its own content and blocking competitors on its network. Or it could increase the cost of licensing its own channels to rival cable companies, or simply prevent those channels from appearing on streaming services. If you control a chunk of programming and the method of distributing that programming, it opens up opportunities for mischief.