Trump's beef with CNN could spill over into AT&T's $85B deal with Time Warner

President Donald Trump's threat to block the $85 billion deal between AT&T and Time Warner has yet to materialize. Time Warner chief executive Jeff Bewkes even scoffed at the notion back in May.

However, that could soon change due to the adverse relationship between the White House and Time Warner-owned CNN.

President Trump’s reposting of an altered wrestling video was celebrated by its creator on Reddit. Enlarge President Trump’s reposting of an altered wrestling video was celebrated by its creator… more

Recall how CNN was recently hit with a $100 million lawsuit after it retracted a story detailing how Senate investigators were looking into a meeting between President Trump adviser Anthony Scaramucci and the CEO of the $10 billion Russian Direct Investment Fund.

Consider the GIF controversy from earlier this week, plus CNN's response to the Reddit user who created it, and the scenario doesn't bode well for Time Warner (NYSE: TWX) and AT&T's getting the transaction approved by Trump-era regulators.

Meanwhile, analysts have since been speculating how the Department of Justice’s Antitrust Division will view the merger. A recent New York Times feature, titled "The Network Against the Leader of the Free World," explains just how problematic the situation is:

"White House advisers have discussed a potential point of leverage over their adversary, a senior administration official said: a pending merger between CNN's parent company, Time Warner, and AT&T. Mr. Trump's Justice Department will decide whether to approve the merger, and while analysts say there is little to stop the deal from moving forward, the president's animus toward CNN remains a wild card." The silver lining in this could be that Trump thinks highly of AT&T (NYSE: T) CEO Randall Stephenson. During meetings with tech executives last month, Trump gave his congratulations to Stephenson for doing “really a top job."

The president hasn’t spoken publicly about the deal since his pre-election comments, but a Bloomberg report earlier this year cited unnamed sources who said Trump was holding onto his opposition.

The DOJ is currently evaluating the deal. If it feels it would spur an unfair marketplace for consumers, it could choose to litigate in court to block it.

There could also be ramifications on overall M&A activity should "political beef" play a role in winning DOJ approval, Axios' Dan Primack explained. "It also would be sure to spark legal challenges," he added.

Thirty-five years ago, Judge Harold Greene broke up AT&T (separated the local operating companies from the long-lines business). Now, they have put it all back together with the Baby Bells gobbling each other up until Southwestern Bell ended up owning all of them. Then SWB just buys AT&T and voila, it’s like Judge Greene never did anything.

That is not exactly right. AT&T was not the last divested RBOC standing.

As of 2016, Verizon is one of three companies that had their roots in the former Baby Bells. The other two, like Verizon, exist as a result of mergers among fellow former Baby Bell members. One, SBC Communications, bought out its former parent AT&T Corporation and assumed the AT&T name. The other, CenturyLink, was formed initially in 2011 by the acquisition of Qwest (formerly named US West).

Going back to explain Verizon's piece:

In 1997, Bell Atlantic expanded into New York and the New England states by merging with fellow Baby Bell NYNEX.

Bell Atlantic originally operated in the states of New Jersey, Pennsylvania, Delaware, Maryland, West Virginia, and Virginia, as well as Washington, DC.

In 2000, Bell Atlantic acquired GTE, which operated telecommunications companies across most of the rest of the country that was not already in Bell Atlantic's footprint. Bell Atlantic, the surviving company, changed its name to "Verizon", a portmanteau of veritas (Latin for "truth") and horizon.[10]

Circling back to my piece of the story.

Verizon began negotiations to purchase long distance carrier MCI in 2005. MCI accepted the company's initial $6.75 billion offer in February 2005, but then received a higher offer from Qwest Communications. Verizon increased its bid to $7.6 billion (or $23.50 a share), which MCI accepted on March 29, 2005.[35] The acquisition gave the company access to MCI's one million corporate clients and international holdings, expanding Verizon's presence into global markets.[35][36] As a result, Verizon Business was established as a new division to serve the company's business and government customers.[37]

All this from Wikipedia.

I know this because after working for ITT USTS and SPC Sprint, I started with MCI (Jack the giant killer) in 1983 and spent 31 years there until I retired from Verizon Business in December of 2014. Part of the 31 years included the purchase of MCI by Bernie Ebbers-LDDS/Worldcom and the subsequent scandal and bankruptcy. It was a white-knuckle ride but Verizon did right by me!

Oh, along the way and after that a few more things happened:

In September 2013, Verizon purchased the 45% stake in Verizon Wireless owned by Vodafone for $130 billion.[78] The deal closed on February 21, 2014, becoming the third largest corporate deal ever signed, giving Verizon Communications sole ownership of Verizon Wireless.
On May 12, 2015, Verizon announced they would acquire AOL at $50 per share, for a deal valued around $4.4 billion.[94][95]
The following year, Verizon announced that it would acquire the core internet business of Yahoo for $4.83 billion.[96][97][98]
Following the completion of the latter acquisition, Verizon intends to operate AOL and Yahoo under a new division known as Oath.[99]
On May 23, 2017, Verizon CEO Lowell McAdam confirms company's plan to launch a streaming TV service later 2017.[103] The integrated AOL-Yahoo operation, housed under the newly created Oath division, will be organized around key content-based pillars.[104]
On June 8, 2017, Yahoo! shareholders approved the sale of some of the company's internet assets to Verizon for $4.48 billion. The deal officially closed on June 13, 2017.[105][106][107][11][12]

Bernie Ebbers is still in Federal PMITA Prison for his securities fraud and conspiracy charges.

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