Opinion

How Can Trump Really Punish CNN? Allow the AT&T-Time Warner Merger

Nicholas Economides

By Nicholas Economides

After this week’s events, we should start considering who might be Time Warner’s next suitor.

By Nicholas Economides

History often repeats itself. Is AT&T’s latest dilemma a result of its own miscalculation or is it because of Donald Trump?

In late 1980, the U.S. Department of Justice (DOJ) offered to settle a major antitrust case against AT&T if it agreed to spin off Western Electric, the equipment division of AT&T. But AT&T assumed that the recently elected President Ronald Reagan would eventually drop the suit and rejected the offer. AT&T bet wrong, and Reagan’s DOJ insisted on the break-up of the company.

DOJ’s present suit to stop AT&T’s buyout of Time Warner bears a similar hint of miscalculation. The merger was proposed when Hillary Clinton looked like a safe bet for president, but with the decision left up to Trump’s DOJ antitrust chief, Makan Delrahim, its prospects for completion were then in doubt. AT&T hoped that a conservative would still approve the merger, and stuck by its plans. But it was wrong, as it was with Reagan: The DOJ sued this week to block the merger.

Read the full article as published by Fortune

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Nicholas Economides is a Professor of Economics at NYU Stern School of Business.