The origins of the ongoing AT&T pay-for-play crisis reach back to October 2016. It was then, during the last weeks of the U.S. presidential election, that AT&T, the nation’s second-largest wireless provider and third-largest home internet provider, announced that it would be acquiring Time Warner, the world’s third-largest media conglomerate after Comcast and the Walt Disney Company.
Once effectuated the $85.4 billion merger would create a media behemoth, giving AT&T unfettered access to display Comcast’s rich content catalogue, consisting of HBO, CNN, Warner Brothers, even a minority stake in Hulu, on its distribution channels. However, the deal’s potential to concentrate economic power meant that it would need to clear a regulatory hurdle with the antitrust division of the U.S. Department of Justice before approval.
But this was a presidential election year, after all. And from the get-go, both candidates appeared lukewarm, at best. Then-candidate Donald Trump, in particular, panned the potential merger, saying that it would “destroy democracy.”
A little over a year later, the Justice Department, under the direction of now-President Donald Trump’s Attorney General, Jeff Sessions, would actually sue to block the AT&T – Time Warner merger. The DOJ’s rationale: “the merged company would have the power to make its video distributor rivals less competitive by raising their costs, resulting in even higher monthly bills for American families.” In March of this year, the parties went to trial in federal court; the judge’s final verdict now pends.
But for AT&T, all plans to quietly await the judge’s deliberation went out the window just last week, when Michael Avenatti, attorney and spokesperson for adult film star, Stormy Daniels released documents showing a series of payments from the ISP to Essential Consultants LLC. Essential Consultants, as it so happens, is the Delaware-based shell corporation set up by Trump’s “personal attorney” and self-styled fixer, Michael Cohen to pay hush money to Stormy Daniels about her alleged affair with Trump.
Quickly substantiated by The New York Times and NBC News, Avenatti’s disclosure, showed that AT&T had, in fact, paid Cohen a total of $600,000 starting in 2017 to consult on the AT&T-Time Warner merger. But as commentators quickly pointed out, Cohen didn’t have any particular expertise in anti-trust or telecommunications law. The implication was clear: by retaining Cohen, AT&T hoped to personally lobby the President himself. To make matters worse for AT&T, the company also disclosed that the special counsel’s office had approached AT&T on the matter last year.
So how has AT&T responded? Only days after the crisis erupted, AT&T CEO, Randall Stephenson released an all-company email, acknowledging that “hiring Michael Cohen as a political consultant [had been] a big mistake.” AT&T also ousted its D.C.-based senior executive vice president of external and legislative affairs, Bob Quinn, who had approved the contract with Cohen. Quinn’s team will now report to AT&T’s chief lawyer.
The issue may not be over yet. Senate Democrats recently sent letters to AT&T as well as Novartis, the Swiss-based pharmaceutical multinational that also paid for Cohen for his consulting services, raising questions about a potential “pay-for-play operations.” Critical issues and crisis can sometimes have a longer burn.
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Photo by Robert Scoble (Flickr) [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons