EXCLUSIVE: There are rumblings at the highest executive levels that AT&T’s top executives are considering divesting some Time Warner assets — including news organization CNN and celebrity gossip site TMZ — after they merge.
AT&T expects the Justice Department to approve its $85 billion acquisition of Time Warner, and for the deal to close, by year end. The telco has already named longtime exec John Stankey to be CEO of AT&T’s media properties. He’s leading the Time Warner Merger Integration Planning Team, working with Time Warner CEO Jeff Bewkes.
CBS has long had its eye on CNN. The broadcast company’s CEO, Les Moonves, said at Herb Allen’s Sun Valley retreat last month that he would be interested if the cable news network became available. Neither CBS or AT&T would comment.
For TMZ, Deadline was told that AT&T is considering a sale to a private equity company. “They don’t want any controversy,” one source with knowledge of AT&T’s intentions says, adding that the communications giant may also be looking to sell other properties under Turner.
Selling CNN might help avoid a different kind of controversy for AT&T: President Donald Trump loathes the news network. That could be troublesome for telco CEO Randall Stephenson. His company frequently does business with the FCC, now controlled by Trump appointees.
AT&T was one of the largest donors to Trump’s inaugural committee, giving $2 million in cash contributions and $82,483 in-kind donations for mobile equipment/software, according to The Hill.
Last year, Stephenson personally donated $50,000 to the Senate Leadership Fund — a SuperPAC controlled by Senate Majority Leader Mitch McConnell — as well as $11,000 to the National Republican Senatorial Campaign Committee, according to filings compiled by the Center for Responsive Politics.
In October, shortly after agreeing to buy Time Warner, Stephenson said he’s “committed to continuing the editorial independence of CNN. Independence is what makes CNN so popular and so valuable. We will not do anything to change that.”
This would be a good time to sell CNN. News networks are enjoying some of their best ratings ever as the public feasts on daily updates about the Trump administration. CNN recently had its most-watched Q2 ever.
Time Warner doesn’t offer financials for individual networks. But this week the company cited CNN’s strong performance as a factor that helped to lift Q2 revenues at the Turner networks operation by 3%, to $3.1 billion, in an otherwise difficult quarter for cable channels.
CNN generated about $1.3 billion in revenue, and $416M in cash flow, in 2016, S&P Global Market Intelligence’s SNL Kagan estimated. That does not include companion networks such as CNN en Espanol and CNN International.
CNN would enable CBS News to expand its international reach and distribution. Last month, CBS replaced ABC in a newsgathering and sharing alliance with BBC. CBS had been in a similar arrangement with Sky, which is awaiting UK approvals for a deal to sell to 21st Century Fox.
Blending CBS News with CNN would enable the company to cut duplication, and develop additional opportunities to showcase its journalists and their work. That strategy appears to be working at Comcast’s NBCUniversal, where people and programs frequently cross between NBC, MSNBC, CNBC, and Telemundo.
But Moonves might have to work to sell CBS shareholders on the merits of buying a cable channel. The business is widely seen as in decline as pay TV subscriptions decline.
That was one reason many CBS shareholders were relieved last year when Sumner and Shari Redstone scrapped the idea of merging the network with Viacom. The Redstones’ National Amusements controls about 80% of the voting shares in both companies.
Moonves said at the time that he’s “very happy with the way we are as a stand-alone company,” and was “able to play the game just fine.”
(Full disclosure: Busch has a pending suit against AT&T charging it with invasion of privacy in connection with the Anthony Pellicano wiretapping case.)