WASHINGTON, May 13, 2018 - AT&T CEO Randall Stephenson on Friday announced that the company was parting ways with the executive responsible for hiring Trump “fixer” Michael Cohen in an apparent effort to grease the skids for the company’s merger with Time-Warner.
The revelations of the AT&T payment to Cohen revived questions over whether Trump punished the company by ordering a Justice Department lawsuit to block its merger with Time-Warner.
The announcement ended a week of media scrutiny for the telecom giant. In a letter distributed to employees in which he acknowledged that the $600,000 contract with Cohen for advice on the pending merger, Stephenson admitted it had been “for all the wrong reasons” and was “a big mistake.”
“To be clear, everything we did was done according to the law and entirely legitimate," Stephenson wrote. "But the fact is, our past association with Cohen was a serious misjudgment.”
Vowing to "do better," Stephenson took responsibility for the vetting failure that had led to Cohen being brought on board as a "political consultant" despite being a personal injury lawyer with no experience in telecommunications or mergers and acquisitions law.
Stephenson also announced that the executive most directly responsible for the decision — Executive Vice President for External and Legislative Affairs Bob Quinn — will retire, and that AT&T’s internal lobby shop will report to General Counsel David McAfee “for the foreseeable future."
Cohen offered insights into the incoming administration
According to a representative in AT&T's Washington office, Cohen pitched his services to the company during the transition period between Trump’s November 2016 election victory and the January 2017 inauguration.
Cohen told AT&T executives that he was leaving the Trump Organization to consult for a small number of companies, to which he'd provide information on “key players” within the administration and their priorities, as well as insights into “how they think.”
Companies often retain persons close to an incoming presidential administration as consultants or lobbyists. Because former Secretary of State Hillary Clinton was widely expected to win the 2016 election, many such organizations were unprepared for dealing with a Trump White House.
Cohen took full advantage of AT&T's electoral miscalculation, and despite his lack of total lack of qualifications -- apart from a relationship with the incoming president -- the decision was made to hire Cohen at a rate of $50,000 per month.
While his contract expressly forbade lobbying activity unless he’d notified the company beforehand, AT&T never asked him to set up meetings, nor did he set any up himself.
AT&T also revealed Friday that Special Counsel Robert Mueller and his team knew about the payments as of November 2017, when his office contacted the company for information as part of the ongoing probe into Russian interference in the 2016 election.
The AT&T representative indicated that there’d been no further contact with Mueller’s office since December of last year and that the company “considers the matter closed.”
The company's relationship with Cohen became public after attorney Michael Avenatti, who currently represents adult film actress Stormy Daniels in a lawsuit against the president, released documents detailing how AT&T paid Cohen.
The company funneled the money through Essential Consultants LLC, a Delaware-based shell corporation he'd established as a vehicle through which he paid Clifford $130,000 just before the 2016 election in exchange for her not revealing a prior sexual relationship with Trump.
Cohen payments put DOJ effort to block merger back in the spotlight
Stephenson's admission that AT&T hired Cohen to potentially leverage his relationship with Trump once again raised the question of whether the president personally intervened in the company’s merger with Time-Warner, which owns the cable news outlet CNN, a frequent target of his ire.
Trump has often spoken of his desire to personally direct the Justice Department’s operations and had frequently launched specific attacks on CNN’s coverage of him over the course of his 2016 campaign.
Trump specifically invoked CNN when he promised to block the merger
His public feud with CNN has led to questions whether he would retaliate by following through on a campaign promise to block the AT&T-Time-Warner merger, which he promised to do at an October 2016 campaign rally in Gettysburg, Pennsylvania, days after the deal was announced.
“As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few,” Trump said.
His fury at CNN for the negative stories it reported about his campaign and wall-to-wall press coverage sparked by its reporting on the dossier and the intelligence community assessment was even more evident at his final news conference before taking office, during which he refused to take questions from CNN’s Jim Acosta, who he angrily dismissed as “fake news.”
While some dismissed Trump’s attacks on CNN and his comments about the merger as yet another example of Trumpian bluster, the questions over whether he’d intervened personally took on a new life last November when the Justice Department filed a lawsuit to block the merger.
The DOJ lawsuit raised eyebrows because vertical mergers are rarely challenged
The lawsuit is unusual because the DOJ rarely intervenes in so-called “vertical” mergers between companies that represent two links in a supply chain, such as Time-Warner (which produces news and entertainment content) and AT&T (which owns the infrastructure to deliver it to consumers).
When the Justice Department intervenes in a merger on antitrust grounds, it is usually a “horizontal" merger, which joins two competitors in the same industry.
Because such mergers are often more closely reviewed by regulators, the Trump administration's intervention in the vertical one between AT&T and Time-Warner became even noticeable when Federal Communications Commission Chairman Ajit Pai began taking actions to facilitate broadcast TV giant Sinclair Broadcasting's purchase of Tribune Media, even though regulators would traditionally be more skeptical of such a deal, which would give Sinclair control of far more stations than allowed under current media ownership rules.
Trump has publicly praised Sinclair, and Sinclair often returns the favor
Even as Trump has attacked and threatened CNN along with most other major media outlets that cover his administration, he has repeatedly praised Sinclair’s coverage, which he has called "far superior to CNN and even more fake NBC."
Sinclair, which is based in Hunt Valley, Maryland, is notorious for forcing its local stations to air “must run” political content reflecting its owners' conservative views.
Many of these segments are commentaries by the company's "chief political analyst," Boris Epshteyn, in which the former White House staffer obsequiously defends the administration from which he resigned after less than three months service. Another "must-run" segment which was met with widespread ridicule and criticism forced Sinclair’s local anchors to denounce "fake stories" and journalists who "use their platforms to push their own personal bias and agenda to control what people think" as "dangerous to our democracy."
Once again, Giuliani makes things worse
Trump's attacks on outlets that report stories which are unflattering to him or his administration gave rise to suspicions that he had involved himself in the decision to try and block the AT&T/Time-Warner merger. Those were allegations the White House strongly denied at the time.
But Trump attorney Rudolph Giuliani reignited the controversy Friday when addressing whether AT&T’s decision to hire Cohen was the kind of “swampy” behavior that Trump had promised to end.
Giuliani echoed a statement by White House Press Secretary Sarah Huckabee Sanders, who on Friday told reporters that Trump wasn’t affected by AT&T's payments to Cohen because the Justice Department was opposing the merger.
But in an interview with The Huffington Post, Giuliani went further by suggesting that the president had personally intervened to block it, contradicting the White House’s prior assertions that Trump wasn’t involved.
“He did drain the swamp…the president denied the merger,” Giuliani said. “They didn’t get the result they wanted.”
The former New York City mayor -- who resigned from his law firm this week over his representation of the president -- attempted to walk back his statement on Saturday, telling CNN that Trump personally told him that he did not interfere.
The president also weighed in with a tweet late Friday, attributing the opposition to “the Trump Administration’s Anti-Trust Division,” and suggesting that his administration’s opposition to the merger was going unreported.