The AT&T / Time Warner deal hit a somewhat unexpected snag last week when the federal government said the company would need to divest itself of CNN in order to receive antitrust approval of the $85 billion deal that would see AT&T buy Time Warner.
Specifically, the Justice Department said AT&T must sell either DirecTV or Turner Broadcasting, of which CNN is a major part, or the deal will not be approved. AT&T said that’s not going to happen. No way, no how. With the government also unlikely to yield any ground, it appears that the case will be going to court, and that has public relations consequences for all involved.
On one side are those who claim the condition is both unfair and punitive, a way for the Trump administration to stick it to CNN, which has been consistently highly critical of the President, his campaign, and his administration.
Then, there are those who say there must be something else at play here, that AT&T is crying foul in the media rather than moving through the proper channels. Those that support the government’s position are saying if AT&T does not divest, it would “raise costs” and “stifle innovation.”
There is a third group of shareholders and media consumers who are concerned what this deal may mean for all involved, whether it’s eventually approved or denied.
AT&T CEO Randall Stephenson said his company will hold its ground. “If we feel like litigation is a better outcome, then we will litigate…” Speaking at a New York Times conference, Stephenson added his company was ready to go to court the day the deal was announced, over a year ago.
Further, and this position has the potential to have a significant impact on the media marketplace (and the public relations industry), AT&T has been very vocal about its intention to “disrupt the entrenched pay TV models…”
Now, a fair accounting of this position would admit this is already happening. With Netflix, Hulu, Amazon Prime, and other streaming apps, the “pay TV” model that held sway for decades is living on borrowed time.
Stephenson believes the purchase would better position his company to be a leader in the new entertainment media revolution, that has already happened. As more content is moved to segmented streaming services, the old bulk-channel pay cable platform is quickly becoming obsolete. This fact stands to have a major impact on Time Warner’s cable programming properties.
For the company to control its own destiny in this regard puts it in a much more competitive position. But that doesn’t mean it will happen, especially anytime soon.
About the Author: Ronn Torossian is CEO of 5WPR.