Despite his campaign vows to block the deal, President-elect Donald Trump could be forced to take a friendlier stance on AT&T's $85 billion acquisition of Time Warner than he initially laid out, analysts say — potentially disappointing supporters who were hoping for a big showdown with the company.
Regulators at the Justice Department are likely to examine the proposed deal closely no matter what happens. But a constellation of factors, from the makeup of Trump's transition team to the mundane details of antitrust law, may make it difficult for Trump to oppose the tie-up once he is in office. As a result, one of the earliest decisions to occur on Trump's watch may be the regulators' approval of the massive acquisition.
Trump blasted the merger at a campaign rally in Pennsylvania last month. “As an example of the power structure I'm fighting,” he said, “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.”
Trump's critique of media consolidation is stoked by fears that the trend may suppress conservative voices. Trump has clashed repeatedly with CNN over its coverage of him, at one point calling the channel “an arm of the Clinton campaign.” He derided a CNN documentary about himself as a “total waste of time” and “a joke.” But by highlighting CNN — which is owned by Time Warner — as a reason to oppose the AT&T deal, Trump risks revealing a personal grudge against CNN's coverage that will not help his administration make an antitrust case, economists say.
“Personal vendettas can't be the basis that you take a case to court,” said Hal Singer, an economist and senior fellow at the George Washington Institute for Public Policy.
Trump has targeted other media companies, as well. On the campaign trail, Trump accused Comcast-NBCUniversal of “trying to poison the mind of the American voter,” adding that he believes the two companies should never have been allowed to combine. He has also said that Jeffrey P. Bezos, Amazon's chief executive and owner of The Washington Post, faces “a huge antitrust problem,” complaining of The Post's critical coverage and accusing Bezos of using the newspaper to benefit Amazon politically in Washington.
Antitrust experts say these objections do not constitute a compelling antitrust case. To challenge AT&T-Time Warner, regulators would need to demonstrate that the transaction poses significant harms to the economy and to competition.
But Trump advisers charged with handling tech policy may not view the AT&T deal in a negative light — highlighting tensions to come between an outsider candidate and the countless insiders who would likely staff the majority of Trump's administration.
“A lot of these jobs are going to go to establishment Republican types who, ironically, are probably going to just be a continuation of everything he's railed against,” said one tech industry official, who spoke on the condition of anonymity to speak more freely.
One of Trump's earliest hires on tech, Jeffrey Eisenach, is a visiting scholar at the American Enterprise Institute, an elite Republican think tank in Washington. Eisenach's role on Trump's transition team gives him notable sway over the future of the administration's tech policies. The economic researcher's previous clients include the country's largest wireless carrier, Verizon, among others.
Analysts say he has spoken approvingly of big mergers in the past. Eisenach “has been supportive of all the deals in the last few years, including the AT&T/[T-Mobile] and Comcast/Time Warner Cable deals,” according to a recent investor note from the analyst firm New Street Research.
That could suggest Eisenach takes a similar view of the AT&T deal, though Eisenach did not immediately respond to a request for comment.
“Either there's going to be mass tension within his team, or he's going to sit back and let the [establishment conservatives] have their way — in which case, all of his campaign rhetoric on blowing up Comcast and AT&T was just cheap talk,” said Singer.
Analysts say AT&T was likely caught off-guard by Trump's victory. “They made a calculated bet with the Hillary administration — this is not what they expected,” said Frank Louthan, an industry analyst at Raymond James. “They may still prevail, but that was a shock.”
AT&T has said it stands ready to work with the incoming Trump administration and that their priorities appear aligned. “We really look forward to working with President-elect Trump and his transition team,” AT&T chief financial officer John Stephens said at an investor conference Wednesday. “His policies and his discussions about infrastructure investment, economic development and American innovation all fit right in with AT&T's goals.”