Months into President Donald Trump’s first term in the White House, his Justice Department sent shockwaves through the media industry by suing to block AT&T’s takeover of CNN owner Time Warner.
The unusual challenge set off speculation that the lawsuit was driven at least in part by a desire to punish CNN for critical coverage of Trump.
Although the lawsuit eventually failed and the deal went through, the damage was done. The Trump administration’s legal challenge cost AT&T precious time in the rapidly evolving media landscape and helped doom the merger.
Now, Trump is returning to power at a time when the hobbled media industry appears to be on the cusp of another frenzy of deals. And his administration will have ample opportunities to slow or even kill future transactions – lifeboats that some media companies may need to survive.
Case in point: Comcast revealed on Wednesday plans to spin off MSNBC, CNBC and other cable assets into a company that’s separate from the NBC broadcast network.
The spinoff itself won’t require approval from the DOJ or the Federal Communications Commission. But it’s widely expected the spinoff company will need to find a dance partner to make it through the world of cord-cutting. That will give Trump-appointed regulators an opportunity to damage a network he’s clashed with for many years.
“There are only two media entities that Donald Trump dislikes more than CNN. One is MSNBC and the other is NBC,” Craig Moffett, a media veteran and founder of MoffettNathanson, said in a phone interview.
Eyebrows in the media industry raised this week when Brendan Carr, Trump’s nominee to lead the FCC, linked the agency’s review of the Skydance-Paramount deal to a “60 Minutes” interview with Vice President Kamala Harris. Carr told Fox News that the FCC will want to review transcripts from the “60 Minutes” interview as part of its review of Skydance’s proposed deal with CBS owner Paramount.
“That speaks volumes. It says that media outlets traditionally described as liberal may have a very hard time doing deals,” said Moffett.
Jeffrey Sonnenfeld, founder and president of the Yale Chief Executive Leadership Institute, told CNN that the opportunity for a “brilliant re-clustering” of media businesses is being clouded by the incoming Trump administration.
Sonnenfeld, a contributor to CNBC, suggested that Trump’s “overt vindictiveness” could lead officials to slow-walk deals to hurt their value for “revenge,” even if those deals ultimately prevail in court.
Sonnenfeld argued that’s exactly what happened with the AT&T-Time Warner deal.
“They slow-walked it. AT&T ultimately won, but it was a pyrrhic victory. They lost a window. It became a bad deal,” he said.
Gaetz and Vance are fans of Biden’s antitrust cop
Trump’s victory initially set off a party among Wall Street dealmakers, with many cheering the end of the Biden administration’s intense antitrust scrutiny.
It’s true that analysts expect the Trump administration to generally be less hostile to mergers. Trump will likely replace the Biden administration’s tough antitrust cop, Federal Trade Commission Chair Lina Khan.
Yet it’s also true that some Republicans – including some tapped to join the Trump administration – have been described as “Khanservatives” because they’ve called for tougher, not weaker, antitrust scrutiny.
In February, Vice President-elect JD Vance said Khan is “one of the few people in the Biden administration that I think is doing a pretty good job.”
Under Trump, the DOJ could be led by another Khan fan: former Florida congressman Matt Gaetz. Earlier this year, Gaetz told NOTUS that the FCC chair’s work “inspired me” and he expressed hope she stays in power for a Trump administration.
As Gaetz fights to survive a tough nomination process to be attorney general, Comcast dropped a bombshell in the media industry by spinning off MSNBC, CNBC, USA, Oxygen and other networks.
Brian Roberts, the CEO of Comcast, said Wednesday that the new company will be “highly attractive to investors, content creators, distributors and potential partners.”
More deals are coming. Will Trump try to block them?
Comcast promises the new entity, for now known as SpinCo, will start with a growth trajectory and significant financial firepower. But there is already speculation it may need to bulk up to survive.
That could mean a sale to another entity or an acquisition. Either way, a future deal would likely require approval from the DOJ, potentially led by Gaetz, and other Trump regulators. (The FCC’s blessing may not be required because SpinCo won’t include the NBC broadcast network).
Jettisoned from the Comcast mothership and its stable cash flows, the spinoff cable channels will have less financial protection from the volatility of the TV industry, not to mention less of a shield from the Trump administration.
“This will be an interesting experiment,” said Frank Louthan, an analyst at Raymond James. “In theory, they should be able to survive if appropriately capitalized. But it’s unclear. It’s definitely going to be a challenge for them.”
One major obstacle for Comcast’s spinoff cable assets is they will need to reach new agreements to distribute content without being part of the larger NBC bundle – at a time of aggressive cord-cutting.
“If this was an easy thing to do, we would have already seen it happen,” said Louthan. “My guess is over the medium term, they will either do an acquisition or be acquired.”
However, Louthan argued that a deal would not be imminent because the spinoff will take a year to complete, suggesting a transaction may not occur until after the end of Trump’s term.
Lee Petro, a member of the law firm Dickinson Wright’s Washington DC office, said it’s “definitely possible” the DOJ reviews a future deal involving the spinoff cable channels “to cause pain” to those networks.
“It’s hard not to look at the spinoff of CNBC and MSNBC as potentially a response to the new administration,” said Petro.
A source familiar with the matter says the company had been evaluating the potential transaction for some time, well before the administration change.
The Trump transition team did not immediately respond to a request for comment.
