Turner Broadcasting's headquarters in Atlanta.

AT&T’s planned purchase of Time Warner has plenty of sports implications, and so does Wednesday’s news that that the U.S. Department of Justice is pushing for Time Warner to sell either Turner Broadcasting or DirecTV to gain approval for the merger. Turner Broadcasting includes Turner Sports (Bleacher Report, other digital properties, and the sports content shown on TBS, TNT and truTV), and they have rights to the NBA, MLB, NCAA basketball, the PGA championship, and soon, the UEFA Champions League and Europa League, so a sale there could shake up the sports broadcasting world significantly.

Unwinding the AT&T/DirecTV purchase (which only was approved in 2015) would also have sports implications. But sports appears to be far from the primary reason for the regulatory push to sell Time Warner; Recode’s Peter Kafka makes the case this is about President Donald Trump’s grievances with Turner-owned CNN.

We could spend time discussing why this makes no sense under conventional antitrust law, since AT&T/Time Warner is a “vertical” merger, where the two companies are in different lines of business.

But don’t ask us. Ask antitrust expert Makan Delrahim, who announced last year that the proposed deal shouldn’t be a problem.

Except now Delrahim has apparently changed his mind. Or, more precisely, Delrahim now works for Donald Trump as the head of antitrust at the DOJ.

…Per the FT, “It’s all about CNN,” which makes sense if you are a leader of a banana republic who believes that news outlets that report stories critical of your leadership are “fake news.”

Or, if you don’t really think that but know that saying that sort of thing riles up the people who voted for you. Just like complaining about NFL players who engage in silent protest before the start of games whips them up.

If the deal ends up in court, odds are very good that AT&T and Time Warner could win (again, ask 2016-era Delrahim).

But just the threat of a long legal battle could be enough to break up the deal. It’s one thing for AT&T to say it wants to spend $86 billion to buy Time Warner. It’s another to say it wants to spend years in court to get the deal done.

CNN’s Brian Stelter reports that the Justice Department is claiming AT&T offered to sell CNN, which AT&T denies:

This isn’t the first time questions about Trump and this deal have popped up, as Trump blasted it through much of last year’s presidential campaign, citing it as “an example of the power structure I’m fighting” and calling it “a deal we will not approve in my administration.” And Bloomberg reported in January that Trump was still opposed to the deal after his election.

But what’s new here is that the level of opposition has continued despite the legal precedents (the New York Times report notes that even approval of Comcast’s 2011 acquisition of NBC only carried conditions or “behavioral remedies”, and that “The Justice Department’s demand for divestitures would be a major change in antitrust policy”) and despite AT&T’s connections to Trump (they “hired lobbyists close to Vice President Mike Pence and others in the Trump administration” and were “among the top donors to Mr. Trump’s inauguration,” and CEO Randall Stephenson has met with Trump at least twice this year), and that a proposed divestiture would include not just CNN, but all of Turner Broadcasting (and thus, all of Turner’s sports content.)

So, the key question out of this is just how badly AT&T wants Time Warner even without Turner. Non-Turner Time Warner assets include HBO, Warner Bros., The CW, and DC Comics, and there’s some value to all of that, but the Turner channels were believed to be a massive part of the rationale for this attempted merger, giving AT&T a large foothold in the TV content business. It’s possible that they could agree to the sale of Turner as a condition of approval (and that seems more likely than selling DirecTV, given how hard they’ve worked to integrate that business and transfer AT&T Uverse customers to DirecTV), but it seems more likely they’ll either drop the deal entirely or fight these conditions in court.

If Turner was sold, though, it’s interesting to ponder who might buy them. As this would be done to avoid antitrust concerns, it probably couldn’t be any company that already has interests in the field, along the lines of how Disney wouldn’t buy 21st Century Fox’s news and sports properties. So that means probably not Disney, Fox, or Comcast. Some tech companies would have the money, but would they have the interest in investing in a more traditional content ecosystem? One somewhat-wacky possibility is Verizon, which has shown more interest in content than most with purchases of AOL and Yahoo, and which might be looking to compete with AT&T and Comcast across TV/internet/wireless/content. And that would be somewhat entertaining considering AT&T and Verizon’s shared corporate history.

In any case, there could be lots of repercussions from any outcome here. If the AT&T/Time Warner deal is abandoned altogether, that has stock consequences for both companies. If they fight this move in court, that’s going to delay the merger years and add to the costs. Or if they do try and sell off Turner, that could change the broadcasting ecosystem, and alter the sports landscape in the process. At any rate, it appears that this merger isn’t going to be as smooth as both sides had hoped for.

[The New York Times]

About Andrew Bucholtz

Andrew Bucholtz is a staff writer for Awful Announcing.

  • Creighton Rabs

    Let’s say that AT&T is forced to sell DIRECTV… Am I correct in presuming that it would also include the AT&T SportsNet channels which were previously under the DIRECTV umbrella as ROOT Sports? Because if AT&T were forced to sell those assets off, that might make things very interesting on the RSN front in Pittsburgh, Houston and Denver/Las Vegas.

    • eddie

      What gonna happen with turner sports in the future?

  • QED – quod erat demonstrandum

    CNN is garbage. Not even an inkling of balance on stories related to POTUS. They should do time lapse photography of the Chyron running. It is hysterical how anti Trump the station is.

  • Jessica Norick

    I think it’s important to mention that among Turner Broadcasting’s holdings are the rights to the pre-1986 MGM film and television library and the pre-1950 Warner Brothers library; plus the Television and Home Media rights to the RKO library. This is an important detail because it involves some of the greatest films ever made….. Gone With the Wind, The Wizard of Oz, Casablanca, Yankee Doodle Dandy, King Kong, Citizen Kane, and many many more. I’m surprised that none of the reporters have mentioned this, given that particular film library’s significance to American culture.

    • All those films should have been in the public domain decades ago.

      • Jessica Norick

        I don’t disagree with you there, NaBUru38.

  • Jonathan Morerod

    Its very possible Google may throw their hat in the ring and buy Turner. This Merger means for the Internet Scope because TW has a HUGE foot print in the ISP business combine that with ATT and all you have left in the ISP market is ATT, Verizon, Comcast and CenturyLink

    • Jessica Norick

      I’d personally like to see Turner himself buy Turner Broadcasting System back. I’ve heard he has always regretted selling out to Time Warner.