AT&T CEO Randall Stephenson scoffed at the idea that AT&T and Time Warner would need to spin off CNN in order to push through their $85 billion merger deal.
Speaking with CNBC, Stephenson said a CNN spinoff wouldn’t serve to reduce competition.
"I don't know why we'd even talk about that," he told CNBC. "It doesn't seem relevant to approving a deal like this. What would be the competitive issue that you're remedying with spinning off CNN? There are not competitive issues with owning CNN."
Stephenson used the interview to again confirm that his recent meeting with President-elect Donald Trump did not feature any direct discussion of AT&T’s merger.
Speculation that the meeting was regarding the merger intensified after Trump and a CNN reporter got into a shouting match during a press conference the day before. Trump reportedly has reservations about the AT&T-Time Warner deal that could be tied to his disdain for CNN, which he has publicly insulted on Twitter in recent weeks.
But Stephenson said the meeting was not about the merger, and more about the regulatory environment in the U.S. and its possible effect on infrastructure investment.
"[Trump] asked me straight up, 'Has this regulatory environment been difficult for you guys.' And I said it's had a huge impact on how we think of investment in the U.S.," Stephenson told CNBC. "We talked about what the implications of what streamlining regulation would be."
Stephenson’s comments about his conversation with Trump leads some credence to reports that Trump’s FCC transition team is looking to take away the consumer protection powers of the Commission.
If analysts are correct, then it may be that the merger didn’t come up last week because there is little the Trump administration could do to stop it. Wells Fargo analyst Jennifer Fritzsche said the deal is likely to go through just like other vertical mergers have but didn’t rule out a CNN spinoff.
“While we expect there likely will be concessions (possibly a CNN spin-off, and continued infrastructure investment by T), from a legal standpoint, we note that if denied this deal would be precedent setting given the fact that no vertical merger in the TMT space has been denied,” wrote Fritzsche, adding that, while many mergers cut jobs, the small amount of overlap in core business and expertise for AT&T and Time Warner likely means no major headcount reductions.
BTIG analyst Rich Greenfield shared the view that it’s unlikely the merger could be halted. He told the New York Post that it would be a “novel interpretation of the law” should the deal be blocked.