The AT&T Time Warner and DirecTV mergers were a monumental, historical disaster. AT&T spent $200 billion (including debt) to acquire both companies thinking it would dominate the video and internet ad space. Instead, the company lost 9 million subscribers in nine years, fired 50,000 employees, closed numerous popular brands (including Mad Magazine), and basically stumbled around incompetently for several years before recently spinning off the entire mess for a song.
The New York Times recently published the kind of merger post mortem the media usually can’t be bothered to do. The outlet spoke to dozens of individuals at the companies who detail how AT&T leadership was completely out of its depth, refused to take any advice, and blinded by the kind of hubris developed over a generation of being a government-pampered telecom monopoly.
While the Trump DOJ ultimately sued to stop the deal, it was never actually due to antitrust concerns. It was because a petulant President was mad at CNN for critical media coverage. And it was also because Time Warner repeatedly refused to sell itself to Fox boss Rupert Murdoch, who likely hoped to either kill the deal or nab some divested chunks of the acquired assets.
But the NYT tells an interesting tale of a meeting in which not only did Trump originally praise CNN, but AT&T promised it would fire CNN boss Jeff Zucker if the administration approved the deal:
Mr. Trump kept up his Twitter diatribe against CNN and Mr. Zucker. But on June 22, Mr. Stephenson visited the White House along with other chief executives, and Mr. Trump was surprisingly effusive in his praise for the AT&T chairman, saying publicly that he had done “really a top job.”
Mr. Stephenson’s warm presidential reception was shortly followed by a visit to Time Warner by Larry Solomon, the head of corporate communications for AT&T. Mr. Solomon told Mr. Ginsberg that he was there to give him a “heads up” that “we’re going to fire Jeff Zucker,” Mr. Ginsberg recalled.
AT&T denies that ever happened. Then again, it also tries to claim it didn’t take a total bath on the deal. The New York Times, meanwhile, seems to downplay the persistent indications that the Trump DOJ’s sudden and completely uncharacteristic interest in antitrust issues was not just a lawsuit driven by Trump’s petty anger at CNN, but Rupert Murdoch’s interest in acquiring or at least harming a competitor.
The Trump DOJ ultimately lost the lawsuit due to its sloppy failure to truly illustrate the consolidative harms of the deal (since again, they didn’t actually care about that aspect of it). Calls by ex-DOJ officials for an investigation into the DOJ abusing its power (since again, the lawsuit was mostly about Trump’s ego and helping Rupert Murdoch) went nowhere, as such things tend to do in the U.S.
AT&T’s attempt to pivot from stodgy old telco to modern video advertising juggernaut completely collapsed anyway under the weight of its ego and incompetence, forcing the company to spin off DirecTV and Time Warner in various deals that continue to go badly, just in new incarnations with new names (Time Warner Disney is itself a dumpster fire for the ages).
Don’t feel too badly for AT&T though. Something the NYT doesn’t really mention is how the Trump era in general remained an all time great one for AT&T, which not only got a $42 billion Trump tax cut for doing nothing, it received numerous regulatory favors from the Trump FCC from the gutting of net neutrality and media consolidation rules to the effective lobotomization of the FCC’s consumer protection authority.
The Times does mention how most of the AT&T executives who bungled the disastrous deal received massive cash payouts as “punishment.” But the Times downplays how the megadeal eliminated jobs for more than 50,000 (and counting) employees, and resulted in a generally shittier product for consumers (CNN under Discovery leadership is in the midst of a disastrous bid to shift its coverage from bland and feckless centrism to more right wing authoritarian appeasement and it’s… not going great).
The Times also doesn’t really touch on the fact that mindless consolidation like this happens constantly. Or that U.S. antitrust enforcement is comically broken. Or that the press (including the Times) can routinely be found un-skeptically parroting supposed synergies of such deals pre-merger, helping create the problems they report on. At least we got a post-mortem, which is more than most major press outlets can be bothered to do in a country that treats disastrous, pointless mergers like a national pastime.
