AT&T Inc. (T - Get Report) CEO Randall Stephenson got some bad news on Monday, Nov. 6, about his pending acquisition of Time Warner Inc. (TWX)  at just about the same time CNBC was reporting that Walt Disney Co. (DIS - Get Report) executives had been talking to counterparts at Twenty-First Century Inc. (FOXA) about a huge, industry-altering deal.

The two stories roiled the stocks of all four companies -- and much of the media sector -- as Time Warner tumbled and Fox jumped. 

At the heart of both happenings is the story about the pressure that the country's largest media companies are under to try to figure out a viable future now that cable-TV is no longer the cozy, profitable business its been for 40-plus years.

The great disruption known as the internet has forever shaken that comfortable cocoon. Netflix Inc. (NFLX - Get Report)  has attracted more than 109 million subscribers worldwide, all paying a relatively modest $10 per month to watch lots of high-quality TV serials and movies. Meanwhile, appointment television has all but died dead despite AT&T's bet that consumers will still pony up $60 per month for DirecTV Now, its streaming facsimile of cable-TV.

On Monday, Stephenson met with President Trump's recently confirmed head of the Department of Justice's antitrust division, Makan Delrahim, and what he heard was enough to send Time Warner's shares plummeting. Stephenson explained, in an interview with The New York Times, that the Trump Administration position on antitrust isn't what most corporate executives expected. Delrahim, who said a year ago that regulators would probably approve the $85.4 billion AT&T-Time Warner deal, intimated that the DOJ was taking a more nuanced look at so-called "vertical mergers."

So, rather than giving a near-automatic green light to mergers between a distribution company (AT&T) and a content company (Time Warner), the DOJ appears also be looking at the question of size and whether bigger means better for average consumers. The DOJ has been concerned about size and in the past. Even as it approved Comcast Corp.'s (CMCSA - Get Report) acquisition of NBCUniversal in 2011, regulators expressed concern about vertical mergers.

Bob Iger could use a nap, surely.
Bob Iger could use a nap, surely.

On Wednesday, the Financial Times reported that Delrahim's team demanded that AT&T sell either DirecTV, the satellite TV operator it acquired in July 2015, or CNN, the news network that Trump has repeatedly accused of unfair coverage despite similar work being produced by The Washington Post, the Times and Politico, among others. 

Delrahim may also be seeking the sale of Time Warner's Turner Broadcasting System Inc., which owns networks including CNN, TBS and TNT, if it hopes to win regulatory approval for the deal. Subsequent news reports ostensibly coming from a DOJ source alleged AT&T had actually offered to sell CNN. An exasperated Stephenson then issued a statement aimed at calming the waters at Turner and seeking to draw his own line in the sand.

"Until now, we've never commented on our discussions with the DOJ," he said in an emailed statement. "But given DOJ's statement this afternoon, it's important to set the record straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so."

Time Warner's shares rebounded on Friday, jumping 4.1% to $90.60, amid a sense that Stephenson could win in court and that negotiations between AT&T and the DOJ may ultimately lead to a compromise.

Disney and Fox, meanwhile, ended the week on high notes, following the CNBC report that Fox might be considering the sale of its 20th Century Fox film studio, its many TV production studios as well as the Star India networks and the company's 39% stake in European satellite TV provider Sky plc, with Disney as a potential buyer.

Rupert Murdoch.
Rupert Murdoch.

Fox CEO James Murdoch, in an investor conference call Wednesday, declined to comment on the CNBC story, preferring to exclaim that all is fine in the House of Murdoch, the company has all the parts (especially if U.K. regulators would just approve its $15.4 billion acquisition of the 61% of Sky it doesn't already own).

"Fox has the required scale to continue to both execute on our growth strategy and deliver increased returns to shareholders," Murdoch said, ostensibly hoping the story would go away.

Disney, meanwhile, on Thursday impressed investors with details of its new streaming services and the announcement of a new "Star Wars" trilogy, enough to divert the market's attention away from the usual story of declining pay-TV subscribers at ESPN.

The two stories -- AT&T-Time Warner and Disney-Fox -- appeared to intersect by midday on Friday when Vanity Fair's Gabriel Sherman let fly another one of his thorns intended for a Murdoch backside. Murdoch, Sherman wrote, may be attempting to leverage Fox News Channel's many months of positive (over-the-top) coverage of the president by getting the DOJ to scuttle AT&T-Time Warner. Fox declined to comment on Sherman's report.

Murdoch, said Vanity Fair, is still smarting from Fox having been thwarted three years ago in its attempt to buy Time Warner.

"The theory is that Murdoch privately encouraged Trump to scuttle the deal as revenge for Time Warner rejecting Murdoch's $80 billion takeover offer in 2014," Sherman wrote, adding that an unnamed person "close to Murdoch" told him "he'd work behind the scenes to stop it."

On reports like that, media watchers might expect that the craziness of early November could last through Thanksgiving, or beyond.

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