Deal Breaker

‘It’s Politics, Pure and Simple’: CNN In ‘Shock’ Over DoJ Merger Demand

'It’s a brazen attempt at interference in a totally straightforward business deal,' said one news executive about the alleged DoJ meddling in the AT&T-Time Warner merger plans.

Photo Illustration by The Daily Beast

Folks at CNN have been rocked back on their heels—many of them “stunned,” “scared,” and “freaked out,” according to CNN insiders—by the Trump Justice Department’s widely reported demand that Time Warner sell the highly profitable cable outlet and other valuable assets in order to win approval for its year-long plans to merge with telecomm giant AT&T.

“The overwhelming response has been shock,” a longtime news executive told The Daily Beast on Thursday.

“It’s politics plain and simple, and an incredibly brazen attempt at interference in a totally straightforward business deal,” this person added, noting that President Donald Trump has frequently attacked CNN as “fake news” and trashed CNN Worldwide President Jeff Zucker as deserving of termination, along with Trump’s pledges on the stump to block the merger.

One of several CNN insiders who spoke to The Daily Beast said many employees were in a daze Wednesday evening, worried that Trump’s alleged meddling could have negative impact on CNN’s long-term health, their own job security, and Zucker’s survival at the network.

On Thursday, Matt Drudge tweeted: “Jeff Zucker out either way at CNN, primetime ratings abysmal. Feud with President Trump too personal and ridiculous...”

Multiple sources, however, said AT&T’s John Stankey, who would oversee the Time Warner assets post-merger—has privately assured Zucker that his job will be safe when, as and if the deal is done.

But if things go awry, a recent CNN hiring spree, including a reported $50 million investment in political coverage, might also be threatened if the network is left out of the merger, the CNN insider said, adding that billion-dollar annual profits—which Zucker achieved during the widely-watched presidential campaign in which Trump was the main draw—are likely to diminish in the years ahead.

Indeed, the situation is so delicate internally that CNN—which boasts more than half a dozen reporters on its media team led by Brian Stelter—barely mentioned the controversy on its Wednesday programming, and soft-pedaled its on-air coverage on Thursday, although Stelter wrote multiple stories about the merger flap for CNN’s website and led his Wednesday newsletter with detailed coverage of the dispute.

Meanwhile, Fox News framed the issue with the tendentious headline: “Will anti-Trump CNN Boss Jeff Zucker kill $84.5 billion deal?”

Despite a White House denial that the president had discussed his opposition to the merger with the Justice Department, hardly anyone expressed doubts that Trump is behind the latest snag.

"Look at what he says and what he does,” said a different CNN insider who spoke on condition of anonymity. “It's really not that complicated. The guy has talked about stopping the merger on the campaign trail. He was talking about how much he hates CNN and he has attacked Jeff Zucker personally since becoming president; he says he's going to lose his job. In the case of NBC, he's talked about taking away the broadcast licenses of news organizations with which he disagrees."

Leaks to news organizations from unnamed Justice Department officials Wednesday claimed that Assistant Attorney General Makan Delrahim, Trump’s pick to run the department’s antitrust division, warned AT&T chief executive Randall Stephenson when they met to negotiate on Monday that the $84.5 billion deal will not be approved if it includes CNN and possibly even Time Warner’s entire Turner Broadcast division, which also comprises TNT, TBS and HLN among other properties.

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Stephenson even offered to sell CNN to obtain the government’s blessing for the merger, the leaks claimed—a narrative the AT&T chief promptly denied in a press release Wednesday.

The non-profit Protect Democracy filed suit Thursday against the DoJ for documents related to the merger, including communications with the White House and internally within the DOJ itself.

At the New York Times’ Dealbook Conference Thursday afternoon in Time Warner’s Manhattan skyscraper, Stephenson doubled down on his denial, telling Times columnist and CNBC personality Andrew Ross Sorkin: “I have never been told that the price of getting the deal done was selling CNN. Period. And likewise, I have never offered to sell CNN…There is absolutely no intention that we would ever would sell CNN.”

Calling his negotiations with the Justice Department “highly confidential,” Stephenson added: “I think we were both a little disturbed yesterday by leaks and information that came out.”

Stephenson said AT&T is prepared to sue the Justice Department should approval of the merger be denied.

Pressed by Sorkin, Stephenson refused to shed more light on his discussions with Delrahim or account for the contradictions between his public statements and press reports based on sources.

Stephenson argued that the proposed merger is a simple case of vertical integration that doesn’t threaten competition—the kind of deal that the government has consistently approved over the past four decades, including Comcast’s 2011 acquisition of NBC Universal.

Several experts in communications law—and even Delrahim, before his Justice Department appointment—agreed with that view.

“I don’t see this as a major antitrust problem,” he declared in an interview with Canadian television last year.

Delrahim’s about-face came in the form of an email in which he alerted AT&T’s Stephenson that “you need to be prepared to make structural concessions,” a Time Warner source told The Daily Beast.

“And then when they met in person, the AT&T guys said they have no intention of making any structural changes,” the source continued, adding that the AT&T team sought clarity when they asked if Delrahim “meant getting rid of DirecTV [the satellite distribution service which is already a part of the company] or getting rid of Turner.”

 It eventually became clear that the Justice Department’s focus on Turner “was a red herring and it really came down to CNN,” the source said. “Getting rid of DirecTV or Turner or CNN was a non-starter. After Delrahim said that, it was ‘See you in court.’ ”

For much of the 2016 general election campaign until now, Trump has been raging at Zucker, who as chairman and chief executive of NBC Universal in 2003, enjoyed friendly relations with Trump and greenlighted The Apprentice, which made the New York real estate mogul a household name.

But when CNN panelists slammed Trump after the second presidential debate in October 2016—in which the “grab ‘em by the pussy” Access Hollywood tape was front and center—the Republican nominee sent Zucker a bitter email vowing revenge: “Jeff — Too bad you (CNN) couldn’t be honest with how well I did in the debate. The dumbest thing I ever did was get you the job at CNN — you are the most disloyal person. Just remember, I always seem to find a way to get even. Best wishes, Donald J. Trump.” (Trump has long claimed, without any credible evidence, that he was responsible for Zucker’s hiring at CNN.)

Days after the debate, Trump promised a crowd of supporters in Gettysburg, Pennsylvania, that the proposed merger was “a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” adding that AT&T’s acquisition of Time Warner is “an example of the power structure I am fighting.”

“He wants to block this thing, so he’s playing politics for his base,” a second Time Warner source said.

A third CNN insider, however, said whether or not CNN joins AT&T “is a non-issue at this point.”

“No matter what, somebody big is going to own CNN, and there will be big corporate owners who want us—whether it’s Disney or Google or Procter & Gamble—and we’re going to keep doing what we’re doing.”