The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
    Michael Maiello's picture

    Michael Cohen and AT&T

    To me, the most striking thing about AT&T paying Michael Cohen for, I guess, “advice” about how the Trump Administration might handle the Time Warner-AT&T merger is what a waste of money it was.  If AT&T thought that Cohen could influence Trump in favor of the deal, it was money ill-spent.

    I’m sure that many of us (me!) , believe that combining a giant telecom like AT&T with a cable content company like Time Warner will not necessarily be great for consumers.  But the general thinking in the antitrust world is that this kind of merger, termed “vertical” because the two companies are in separate business lines, is acceptable.  That the Department of Justice sued to block was truly a surprise move, even given Trump’s ranting about CNN.  Heck, before he took the job as head of the DOJ’s antitrust division, Makan Delrahim had publicly stated that this merger should not be blocked on antitrust grounds.

    If AT&T paid Michael Cohen to convince Trump not to order the DOJ to sue to block the deal, it miscalculated.  If AT&T paid Cohen for psychological insight into Trump and Cohen told them anything other than, “He’s mad at CNN and will sue to block the deal,” it should demand a refund.

    One thing I think we can take away from all of this, which hasn’t much been written about, is the extent to which major mergers are now subject to presidential whim.  This did not start with Trump.  In 2016, the Obama administration blocked the Pfizer-Allergan merger, because it would have led to the new company being domiciled in Ireland and avoiding many US taxes.  I agreed with Obama’s impulse there, but most people I follow who work in mergers and acquisitions believed that the move was illegal. It’s just that the deal was supposed to close in less than a year while litigating might take a decade.

    Most of the people I follow on Time Warner-AT&T believe the government presented a weak case to block.  But, in front of a judge, you never know.  My guess is that the DOJ loses and this merger goes through, but it’s just a guess.  In the meantime, Trump has used another lever of presidential power against large mergers — the Committee on Foreign Investment in the United States (CFIUS).  CFIUS is supposed to block mergers that might have national security implications.  As an unlikely hypotehtical, CFIUS would prevent a Russian defense contractor from buying Lockheed Martin, But CFIUS is not a real agency.  It’s a committee made up of people from various offices in the executive branch.  The President is the ultimate decider.

    Well, guess what?  Ever since we started a “trade war” with China, deals involving China-based companies, whether they are buyers or even minority investors, are non-starters in front of CFIUS.

    Well, I’ve strayed from Cohen, so I’ll get back to him.  I think AT&T chose to waste its money not just because Cohen seemed an easy avenue to Trump (and for sure sold himself as such) but because in the mergers and acquisitions arena, as in so many others, our weak congress has ceded so much authority to the president and the executive branch that companies must now consider presidential whim to be on an almost even playing field with the rule of law.

    Don’t get me wrong — I am not overly concerned about the rights of big companies to merge. I am concerned about the power of the presidency, especially given the current officeholder.  When a company like AT&T pays a skeev like Michael Cohen ton of money for a short period of work, it speaks to something broken in the system.  It is not, as Politico tried to spin it, normal influence peddling.  It’s a sign that our whole power structure is out of whack.  For professional reasons, I pay more attention to mergers than most, but this is hardly the most important  area of our economic or political lives under such influence.  But presidents are now approving and denying mergers with basically the same freedom they have to wage wars without Congress ever declaring it just.


    Totally agree with your whole point on not ceding any more domestic powers to the office of the president. You can even take Trump out of the picture, pretend he never happened, and I really don't like the idea of the president having even a tiny bit more power, especially in this manipulation-of-info day and age. He/she already has massive power of bully pulpit over the national mood and discourse that the founders never envisioned.

    I just ran across a weird dichotomy in the story of Cohen seller of self as secret lobbyist to the king. It doesn't have anything to do with mergers, but I'll throw it out there. First I see that everyone in the pharma industry and Wall St. was ascared to death of Trump's pharma plans, then they figured out what was actually in it and found it was good for them. BUT BUT oh the shame of having been found to be allied with Trump in any way shape or form. They take the policy but oh my goodness he is bad P.R.? As in: please, we are not an idiot company, do not think us an idiot company, it was a mistake, scientists please don't quit in shame...etc.

    I don't understand - Trump scares the hell out of his mark, shakes them down while they're trembling, then does largely nothing. Lather, rinse, repeat.

    Yeah, this is all such a big part of the Trump grift — he says things that scare big business and that wins him support of the little people. But then he mostly does what big business wants but never says that’s what he’s doing.  He can also pursue some personal feuds in the process and it all serves his pitch.  He’s not “against” the AT&T-Time Warner merger for any antitrust reason.  He is just making it difficult for the deal to happen in an attempt to punish Time Warner for owning CNN.  If he blocks the deal and Time Warner is set adrift and management doesn’t get its payday, people at CNN wil likely suffer for it. The whole thing looks anti big business but it’s really just a personal feud, played out for theatrical and political effect.

    Your pharma example is totally apt. The pharma indexes soared when his “drug price” plan came out.  It’s everything Pfizer ever wanted to hear. As you say, they can’t come out and say that. It’s probably better for all concerned if they don’t and they know that. There’s an adversarial pose here that serves everybody’s interests.

    love getting your input on my intuitions as I know you understand the whole scene on a much deeper level than I do!

    A million or two is chump change for ATT,  yet that's all it often takes to buy off our unprincipled Republi-con politicians.

    The President has "more power" because Congress under Republicans, does jackshit but play politics and pass the buck on accountability.

    The GOP cuts taxes on plutocrat donors to ensure they get campaign $$ to run BS ads at election time. The mission is dividing the country with lies and racism, and obstructing anything that might show jaded low information white voters government can be (or already is in many ways) a positive force in their life.

    Actually they're cheaper whores than that - $40k's a lot of money in congressional payola terms. I'm waiting to find out how wide this money spread - Cohen was a Finance deputy for the RNC - I'm guessing this was a shakedown operation going on for some time, with bunches of beneficiaries across the Republican spectrum. But what were the mechanics of laundering the money? Whose names should we list the indictments under?

    But....the patriotic Real American loving freedom defending Bible thumping hypocrites and blasphemers and their stooges on the Supreme court say money is $peech, it's in the Constitution..!

    The warped dream being not just that money is speech, but speech is money, measured in dollars not words.

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