AT&T, Time Warner hit bumps on way to merger

AT&T, Time Warner hit bumps on way to merger
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The government's review of the AT&T-Time Warner merger is not going as smoothly as the companies hoped.

The $85 billion deal is widely expected to be approved by the Justice Department, but it is running into a number of political road bumps unusual even for controversial mega-mergers.

The deal would see AT&T, one of the nation's telecom giants, buy entertainment powerhouse Time Warner.

AT&T's headaches include President Trump's public disdain for Time Warner's CNN and his opposition to the merger on the campaign trail. Trump's antitrust chief, who is key to approving the deal, is also stuck in a long backlog of nominees awaiting Senate confirmation. And Democrats are probing for any sign of political interference following a New York Times report that said the White House is threatening to use the deal as leverage over CNN.

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All of this has combined to make what was supposed to be a relatively smooth process drag on. AT&T had been expecting to receive approval for the deal last month, according to a source who asked not to be identified who is familiar with the company’s thinking.  

The speed bumps came early.

When the merger was first announced in October 2016, then-candidate Trump offered strong criticism.

"As an example of the power structure I am fighting, AT&T is buying Time Warner and thus CNN — a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," he said in a policy speech in Gettysburg, Pa., laying out the first 100 days of his administration.

After the election, though, Trump softened his stance, saying he didn't have all the facts on the deal and suggesting he could change his mind.

Trump has also staffed his administration with conservatives who generally hold a favorable view of corporate mergers, effectively paving the way for the deal’s regulatory approval.

Ajit Pai, the Republican who Trump chose to chair the Federal Communications Commission, has essentially waived his agency’s authority to review the merger.

And Trump’s nominee to lead the Justice Department’s antitrust division, Makan Delrahim, has previously said that he doesn’t see the deal posing any antitrust issues.

But hovering over the deal is Trump's public and often personal feud with CNN, which he has called "fake news."

Earlier this month, The New York Times reported that White House officials are considering using the merger to rein in CNN.

The White House, the Justice Department and Time Warner all declined to comment or didn’t respond to The Hill.

An AT&T spokesman also declined to comment on the Times story, but said that the company expects the merger to clear by the end of the year.

The Times report injected new drama into an already controversial deal. Democrats, who are all but united in their opposition to the merger, are now asking whether the White House is trying to use its authority to silence critics in the press.

Sen. Amy KlobucharAmy Jean KlobucharKlobuchar taking over Franken's sexual assault bill Tech beefs up lobbying amid Russia scrutiny Facebook wants 'flexibility' in political advertising regs MORE (D-Minn.), the top Democrat on the Senate Judiciary antitrust subcommittee, called the report “deeply troubling.”

“Although I have raised serious questions about the impact of AT&T’s proposed acquisition of Time Warner, Inc., the transaction should be judged solely on its impact on competition, innovation, and consumers, not as ‘leverage’ for political gain,” Klobuchar wrote in a letter to Attorney General Jeff SessionsJefferson (Jeff) Beauregard SessionsFederal judge rules Trump defunding sanctuary cities 'unconstitutional on its face' FBI informant gathered years of evidence on Russian push for US nuclear fuel deals, including Uranium One, memos show Alabama election has GOP racing against the clock MORE last week.

Sen. Richard Blumenthal (D-Conn.) has asked Delrahim to meet with him to discuss any attempts by the White House to intervene in the merger review.

Speaking to reporters Wednesday on Capitol Hill, Blumenthal, a member of the Senate Judiciary Committee, said the White House “has no business getting involved” in these types of legal reviews.

“On the contrary, the White House is ethically and morally prohibited from intervening,” he said. “And so the mere threat of it is a very serious potential violation of ethics.”

But despite their concerns about White House interference, Democrats are no fans of the merger.

When the companies' chief executives came before Congress in December, they were grilled by lawmakers.

Democrats have been trying to convince the Justice Department that the merger poses serious harm to consumers. They argue that AT&T will have the ability to promote Time Warner content like HBO programming or Warner Brothers movies over that of competitors, and restrict other cable and internet providers from accessing that content.

“A combined AT&T-Time Warner would have both the ability and the incentive to increase viewership of its newly acquired content by restricting AT&T subscribers' access to other content or otherwise prioritizing its own,” a group of 22 Democratic senators wrote in a letter to Sessions last month.

“From forcing its customers to buy bigger bundles of Time Warner’s programming to foreclosing rival content creators' access to AT&T customers, AT&T-Time Warner could engage in a wide variety of behaviors that would harm competition in the media market.”

Still, it’s unlikely that the Justice Department will reject the proposal. It approved a similar merger in 2011 when it gave its blessing to the union of Comcast and NBC. That precedent could make it hard for regulators to reject the AT&T purchase.

But the president himself could be a wildcard.

Most analysts are cautious about predicting what the president will do.

“There is not a reason to block it,” said Jeff Kagan, an independent telecommunications analyst.

"But if you throw in the Trump card, I have no idea what’s going to happen next."