AT&T CEO says he has not offered CNN sale to DOJ 4:39 PM ET Wed, 8 Nov 2017 | 03:59
Let's not beat around the bush.
The Justice Department's demand that AT&T sell CNN parent Turner Broadcasting or DirecTV as a condition for approval of its merger with Time Warner is really all about CNN. And that makes it look like the Trump administration is getting personal.
First, let's debunk the idea that there's really a choice here for AT&T when it comes to DirecTV or CNN. DirecTV is a much more important asset by far and the idea of selling it would be a nonstarter. DirecTV — and its NFL Sunday Ticket package — is crucial for AT&T even in this day of weaker NFL ratings. In fact, when the AT&T/DirecTV merger was first announced in 2014, AT&T made it clear that if the NFL didn't continue its Sunday Ticket package with DirecTV, it would walk away from the whole deal. The Trump administration couldn't have picked a more prized asset in the AT&T treasure chest to present as an "alternative" divestment choice.
Second, let's acknowledge that, while the official reports say the administration wants AT&T to consider selling all of Turner Broadcasting, the one Turner asset under DOJ scrutiny is CNN.
The elephant in the room is that CNN is a major thorn in President Donald Trump's side. CNN has certainly produced its fair share of coverage critical of the president. And President Trump has responded in kind with several attacks on CNN since his time on the campaign trail. Perhaps most famously when he tweeted a doctored video showing him wrestling and body slamming the network's logo.
"Even though experts like former FCC official Blair Levin tell CNBC that AT&T would likely win a court battle against this Justice Department demand, fighting it in court would take time and money that would reduce the value of the deal."
Up until now, Trump has restricted his attacks on the network to words and tweets. This move using the antitrust division of the Justice Department, which would financially orphan CNN, is a new and more disturbing development. There are certainly critics who would like to see CNN punished in some way for what is arguably unbalanced coverage. But that punishment should come from viewers and advertisers, not a vengeful administration.
So, that leaves AT&T with a decision: Should it take the administration to court over this demand or just sell CNN off and call it a day?
There's a good argument on economic and even ethical grounds that AT&T should just sell CNN and move on.
The financial equation is simple: Even though experts like former FCC official Blair Levin tell CNBC that AT&T would likely win a court battle against this Justice Department demand, fighting it in court would take time and money that would reduce the value of the deal. Lawyers aren't cheap. If CNN really is the sticking point here, AT&T could even negotiate to sell it off and keep the other Turner assets like TBS and TNT with their lucrative content like the NBA and the NCAA March Madness coverage.
Most reports now say that CNN is still a profitable asset. But, removing it from the equation, doesn't significantly diminish the value of the deal to AT&T.
Ethically, there's a question of a lesser of two evils. Yes, it would be a chilling move against free speech if AT&T were forced to dump a journalism business simply because the president doesn't like it. But on the other hand, journalism ethics experts have complained for years that American journalism has been compromised by the larger corporate interests that own them. Politicians on the other side of the Trump aisle, especially Senator Bernie Sanders, have complained and warned about that problem for years. Maybe a forced sale of CNN and divorcing it from a larger corporate interest would be a lesser evil if it leads to the kind of more independent journalism progressives have demanded for decades.
But that's the choice AT&T has to make right now. Will it fight for CNN and against the administration in the name of the free market and the First Amendment? Or will it make the financially safer decision and sell off an asset while it's still profitable?
Shareholders and regulators won't wait forever for the answer.
Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.
For more insight from CNBC contributors, follow @CNBCopinion on Twitter.
WATCH: AT&T responds to DOJ regarding CNN sale
AT&T responds to DOJ regarding CNN sale 4:09 PM ET Wed, 8 Nov 2017 | 00:48