Stephenson, whose political contributions have long leaned Republican, was betting that the Trump Administration would eventually approve his company's $85.4 billion acquisition of time Warner Inc., albeit with some "behavorial" remedies.
But more than a year after the deal was announced, Stephenson finds himself in the unlikely position of defending CNN against a Republican president, Donald Trump. Oddly enough, Stephenson is also knocking horn with a Republican Department of Justice that appears to be taking a decidedly liberal view of antitrust law -- a position that won support this week from Sen. Al Franken.
In a story first reported by the Financial Times, the DOJ's antitrust division has demanded that AT&T divest either Turner Broadcasting, which includes CNN, TBS and TNT, or sell DirecTV, the satellite TV operator it acquired in 2014, if it hopes to win regulatory approval for its proposed $85.4 billion acquisition of Time Warner Inc. (TWX .
Either way, the AT&T CEO is emphatic. He won't sell CNN, the network, Stephenson said, since it's integral to the company's strategy of featuring news and sports to generate traffic from which to sell advertising on its pay-TV and wireless platforms.
"I have never been told that the price of getting the deal done was selling CNN," Stephenson said on Thursday, Nov. 9, in a New York Times interview. "There is absolutely no intention that we would sell CNN."
AT&T declined further comment.
But while the DOJ's demand that AT&T sell CNN smacks of politics, given the president's many attacks on the network, it also runs counter to Stephenson's view that the department has no grounds to reject a merger pursuing "vertical integration," combining two companies with no overlapping operations.
"It certainly would be remarkable if the government were actually to sue here," Berin Szoka, president of TechFreedom, a libertarian Washington, D.C., lobbying firm focusing on free markets, told TheStreet. "They'd have to argue that the ownership of CNN is such a valuable asset that it would give the combined companies so much leverage that it would result in raising programming prices for consumers. That's plausible, but it wouldn't be easy to substantiate."
The government, though, appears to be arguing that allowing AT&T to combine the Turner networks with DirecTV -- along with HBO and Warner Bros. -- would threaten other pay-TV providers, and by extension, consumers.
Even as the DOJ has approved vertical mergers in recent years, it also has expressed concerns about combining huge distribution networks with content creation. Examples include Time Warner's acquisition of Turner Broadcasting System Inc. in 1995, AT&T buying Media One Group Inc. in 2000 and even Comcast Corp.'s (CMCSA - Get Report) acquisition of NBCUniversal in 2013.
"If the DOJ is moving to negotiate a remedy, they clearly have serious concerns about the anti-competitive effects of putting together content with distribution," said Diana Moss, president of the American Antitrust Institute. "If you create a vertically integrated entity, that could make it harder for rival content providers to get to market and get access to customers."
Makan Delrahim, the recently appointed head of the DOJ's antitrust division, said as much last month in a speech at New York University.
"Competition reduces the need for intrusive, industrywide regulation with the attendant risks of bureaucratic overreach, agency capture and unintended consequences," Delrahim said. "Unlike a centrally planned economy, or a highly regulated one, antitrust employs law enforcement principles to maximize economic liberty subject to minimal government imposition."
In the case of Comcast-NBCUniversal, the DOJ approved the transaction with so-called behavioral conditions that require Comcast to keep its broadband operations at arm's length from its television and film studios. Monitoring such behaviors often proves too difficult for government agencies, Moss argued.
"There is a massive experience with behavioral remedies that really highlights how ineffective they are," she said.
Policy aside, the DOJ's effort to entice AT&T into selling a business such as CNN is shrouded in the president's high-profile attempts to muzzle or discredit media outlets that have reported critically of his administration.
Just last month, Trump threatened to take steps to revoke the broadcast licenses of Comcast's NBC network. Trump's ire was piqued by an NBC News report that Trump had called for a tenfold increase in the U.S. nuclear arsenal during a White House meeting in July with the military, a request that surprised those in attendance.
If the government does take the case to court, and AT&T agrees to the fight, Trump's campaign to defame and undercut CNN would be placed under a bright spotlight.
"If the government is going to tell this story, in the end, their argument is going to have to come down to a focus on CNN," Szoka said. "And the more the case is about CNN, the easier it becomes for AT&T to argue that the government's real objective is political."
More of What's Trending on TheStreet: