Full transcript: Recode Managing Editor Ed Lee answers AT&T-Time-Warner merger questions on Too Embarrassed to Ask

On this episode of Too Embarrassed to Ask, Recode managing editor Ed Lee talks with Kara Swisher about the pending $85 billion merger of AT&T and Time Warner. Will it go through, or will it be blocked? Will it trigger other consolidations and mergers?

You can read a write-up of the interview here or listen to the whole thing in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Too Embarrassed to Ask on Apple Podcasts, Spotify, Pocket Casts, Overcast or wherever you listen to podcasts.

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Kara Swisher: Hi. I’m Kara Swisher, executive editor of Recode, and you’re listening to Too Embarrassed to Ask coming to you from the Vox Media podcast network. This is the show where we answer all of your embarrassing questions about consumer tech and the week’s news. You can send us your question on Twitter with the hashtag #tooembarrassed. We also have an email address, tooembarrased@recode.net. Reminder, there are two Rs and two Ss in embarrassed.

Today on Too Embarrassed to Ask we’re talking about two gigantic media companies trying to merge and why the White House is trying to stop them. The companies are Time-Warner and AT&T, and joining us from New York to talk about them is Recode Managing Editor Ed Lee. Hey, Ed.

Ed Lee: Hey.

So, we normally don’t start the podcast with a question submitted by one of our listeners, but we got one this week that feels appropriate. It was tweeted to us by Gabriel: “I know it’s the simplest question, but why do A&T and Time-Warner want this merger?” So Ed, give us a primer, please.

So, the simplest questions are often the best ones, right, when it comes to very straightforward journalism.

Yep.

Simply put, AT&T is having a hard time retaining customers. They’re in sort of a pricing war with Verizon. Cellphone bills keep going down, which is great for us but not great for the companies. They think by buying Time-Warner they’ll be able to create new kinds of online video and also sell what’s known as targeted advertising or addressable advertising where they’ll figure out, they’ll marry AT&T’s data with Time-Warner’s content and sell ads at a higher rate. So, better advertising, new kinds of online videos, since that’s the future. That’s the thesis.

That’s the concept.

That’s the concept.

So, like Comcast having bought NBC or Verizon buying AOL.

AOL, exactly. The difference, though, between the Comcast-NBC deal is this, is that Comcast actually had a pretty healthy, still has a pretty healthy cable business and now a broadband business because they’ve got what’s known as a regional monopoly. In other words, if you live in an area like New York or LA where Comcast is your cable provider, there are few others available to you, so you can’t switch. Whereas with cellphone service between AT&T, Verizon, T-Mobile, Sprint, you can keep switching your service or you can keep playing them off each other and try to get a lower cellphone bill, which is why they’re just fighting for share now.

So, now they want to have other businesses, not necessarily that they integrate in with AT&T, but there is that idea. We’ll talk about that in a second.

Right, right.

But they want to have other businesses that are adjacent, I guess, right?

Exactly. Exactly.

Okay.

That’s also why Verizon bought Yahoo and AOL. They thought, oh, I get some more data on how the online universe works and somehow I can turn that into a better business. That was its thesis, anyway.

As only can be conceived by a business development person, sure.

Exactly, right.

“We make sausage and therefore we’re going to own a restaurant,” or something like that.

Exactly.

Talk about the timeline. When did the merger talks start? Give us ... as if I’m an idiot.

Okay. Well, apparently this was a discussion more than two years ago that AT&T CEO Randall Stephenson and Time-Warner’s CEO, Jeff Bewkes, they had a lunch. I think Randall called Jeff and said, “Hey, I want to chat with you,” and Jeff was like, “Okay. Sure, fine.” You know, another CEO, big company. Apparently, out of that lunch there was this idea that, hey, maybe AT&T should buy Time-Warner.

Now, here’s just to go back even further, Time-Warner is in the TV programming business. CNN, HBO, Turner, these are the channels that they basically own and we’re all familiar with them, “Game of Thrones” and HBO, etc. Even he saw maybe five or six years ago, there’s an end to this business, right? He sees the rise of Netflix. He sees Google and Facebook basically eating audiences everywhere, and he knows that the rate increases that he keeps getting from the pay TV providers like AT&T or Comcast or Charter, he knows that’s going to end at some point. They can’t continue to pay him more to carry their channels when fewer people are paying for cable, right. So, even five or six years ago, and I wrote about this as did other media reporters, Jeff Bewkes is eyeing his exit.

Of course, yeah.

But what’s the exit? Well, you know, he needs to sell to someone, right?

Right.

Time-Warner, unlike, say, Fox, which is run by Rupert Murdoch, or Comcast, which is run by the Roberts family, you know, it’s a shareholder company. It’s not a family-run company.

Right.

He needs a savior to come in and buy it and so I think AT&T kind of dangling this thing was sort of perfect for him, right.

Right. Right. Speaking of which, he had News Corp interested in buying it, and he didn’t want to be bought by Rupert Murdoch, correct?

Exactly. So before the AT&T deal, Rupert Murdoch actually reached out to Jeff and said, “Hey, we’re going to buy you, $85 a share.” At the time, Bewkes said, “No.” It was over. Of course, that was a smart move because AT&T came and said, “We’re going to offer you $107 a share.” If you’re a Time-Warner shareholder, you’re like, “Oh, that was smart that you waited out.” More succinctly, though, it was simply that he did not want to sell to Rupert Murdoch. He did not want CNN and Fox News to live under the same house. He knew that just wouldn’t work.

Right, right.

Yeah.

So, Rupert went over and sold his stuff, which we’ll get to in a second because he’s linked this. When did the government step in? By the way, first of all, Time-Warner owns, among other things, name the stuff they own.

Well, yeah, so HBO, CNN, Turner, which has TNT and TBS. If you’re an NCAA basketball fan that’s where you usually watch those games, for example. And then there are a few other smaller, like Cartoon Network, smaller channels.

So, all video.

All video.

They got rid of the magazines.

It’s all traditional TV programming. They used to own Time, Inc. They spun that off. They used to own Time-Warner Cable, which we can get to in a little bit, which was also spun off, and they were also part of AOL. That was one of the biggest merger disasters in the history of corporate America.

Yes, I recall.

Exactly, which you know very well, Kara, and that was all divested. So, basically, Jeff Bewkes, the CEO, he had basically unwound what was the largest media conglomerate of all time to just now be this network of TV channels, which were actually profitable and doing pretty well, but as I said earlier, he saw the end of that story. You know, he knew that in a few years’ time it’s just going to keep going down, down, down, which it is now.

He famously called, what did he call Netflix?

The Albanian Army.

The Albanian Army. Yeah. He looks idiotic for saying that.

Of course. I mean, this was back when Netflix was what, 10-20 million subscribers, which is still a lot, a ton. Now they’re 125 million subscribers. So, who had the last laugh at this point, right?

Yeah, he had to really walk back that quote, like, because they were living in a different media environment — an old media environment, really — and then ... really, when I’m saying old I mean old. So, the government stepped in. Explain that.

Okay, so the timeline is really interesting. AT&T said, “We’re going to buy Time-Warner.” It all happened around the time that Trump was running for president. He was on the campaign trail. He was asked about that deal, “What do you think?” He said, “That’s not a good deal. You know, there’s too much power in the hands of too few.” What it really came down to, critics say, is, well, he just doesn’t like CNN.

Right, which he has said and done.

Which he has said. He said it. It’s not a secret at all.

Tweeted, videos.

Videos. He’s done tweets all about it. CNN, of course, is run by Jeff Zucker, who used to be the CEO of NBCUniversal.

Which did “The Apprentice.”

Which did “The Apprentice,” which was a ratings success, big hit show for Trump and for NBC, and Zucker and Trump were buddies. They were tight pals. There are tons of pictures of them together at big events, that kind of thing. The scuttlebutt is that basically, yeah, you know, because he felt more betrayed by CNN’s coverage because he once knew Zucker, they were friends, that he has it out for CNN.

He talked about it today. “I made them all kinds of money.” Isn’t that ironic? Like, God, talk about it’s like a breakup he isn’t getting over.

He can’t get over it. He really can’t get over it. Anyway, so after he became president he actually, his Justice Department enlisted an antitrust executive, this guy Makan Delrahim, who’s a noted lawyer and professor and is good on antitrust, meaning he has a lot of extensive experience. He actually said in an interview before he got that job, they asked him about this AT&T/Time-Warner merger. He said, “Yeah, I don’t see that as being an issue.”

Mm-hmm.

He was given the job and then a month later he said, “I think there’s a problem with this merger. We’re going to take a closer look at it.”

The links between Trump and the Justice Department doing this, they are denying that, of course.

They are denying it. Trump has specifically said, “No, I had nothing to do with that lawsuit.” The Justice Department is suing AT&T to block this merger. That’s where we are right now. The case has been going on. It’s actually going to wrap up this Monday, but the timeline of that event is basically like the guy that they got to run the antitrust said before he got that job, “Yeah. I don’t see that’s a big deal.” He got the job and then a month later he said, “I think there’s a problem here.” They filed the suit. Again, Trump reiterated, “No. I had nothing to do with that.” The Justice Department is supposed to be independent of the White House. That’s just how it’s always been.

Please.

Reminder. Yeah. Exactly. But just because this guy, the antitrust guy, Makan Delrahim, did this hard pivot, people are like, come on, right, that had to be Trump. There’s no evidence. There’s no reporting. There’s nothing to say that right now, but people can fill in the gaps for themselves.

And he keeps talking about it obsessively.

And he keeps talking about it. Right.

Right.

To catch us up a little bit, so now that the trial’s been going on for about five weeks, it’s going to wrap up this coming Monday. So far — and it’s hard to tell because there’s no jury trial. It’s just a judge who’s making this determination. It’s hard to tell which way it’s going to go, but based on the judge ...

So, what do you think?

Based on what the judge has been asking and the way that the cross examinations have been going, I think AT&T has a good shot at winning this.

Right.

Meaning they’re going to be able to buy Time-Warner. The onus is on the Justice Department to prove that this deal is bad for consumers.

Right, and especially ...

That cable bills will rise as a result of this.

Now, on the other hand, over in Rupert Murdoch land, he’s trying to buy Disney assets, right, which is getting more and more messy because Comcast ...

Yeah. It’s Disney buying Fox, right.

Mm-hmm.

That’s the other side of the deal. And that’s slightly different in that, well, first of all, AT&T is a distributor. Time-Warner is a content maker, so you’re marrying distribution and content. They call that a vertical merger.

Mm-hmm.

In the antitrust world that means, oh, they don’t compete against each other, so that’s an okay thing.

Right.

In the case of Disney buying Fox, which is Rupert Murdoch’s company, that’s two content companies merging. Fox has ...

It’s a bigger content company.

Exactly. ABC and ESPN and Fox has Fox News. Well, Fox News is not going to be part of this deal, but like FX, Disney Channel, for example, and these regional sports networks.

Right, and the studio.

You’re marrying ... Exactly, and movie studio. So, you’re marrying two companies that both do the same thing. That’s what’s called a horizontal merger in the universe of antitrust, and that’s typically bad because now you’re taking a competitor out of the marketplace. There are fewer.

So where is Trump on this one? Nowhere, because Rupert Murdoch is his best friend, right?

As soon as that was announced, Rupert got a call from Trump and he said, “Hey, good work.” You know, got a pat on the back.

God.

It’s upside-down.

Corruption.

The merger that would typically get antitrust scrutiny isn’t getting it and the merger that typically wouldn’t get this kind of scrutiny is getting it.

And Randall Stephenson, on the stand, was very much, he’s been very outspoken about this issue.

He has been very outspoken. You know, Randall is the AT&T CEO. He’s done it in the smart way, without going out saying, of course, Trump hates CNN. He sort of said, “Well, he said one thing before and now this is happening, so.” He’s like, “The timeline is weird. It doesn’t make sense to me.” Right?

Mm-hmm. Right.

There was a possible deal before the trial took place where the DOJ said, “Hey, we’ll let this deal go through if you sell Turner,” meaning you don’t buy Turner, which includes CNN. And Stephenson’s like, “No. That’s the whole point of doing this deal. I’m not going to sell that off.” So I think for all intents and purposes, the Justice Department was trying to make this deal not happen, whether it means selling Turner or not doing it altogether.

Yeah.

Yeah. Trump is a huge factor in that. That’s the only way to understand why this is even happening at all.

Right, exactly.

Because the case is bizarre.

All right. On that note, because he infects every part of our national discourse, sadly, we’re going to go to an ad break. We have a lot more to talk about including the immediate effects if it goes through, and then when we get back ... Before we go, you’ve got to do your best reading of the line hashtag money.

Hashtag money.

No. That’s not good, Ed. Come on. You’ve got to sell this. This is what’s paying your salary. Come on.

Hashtag money!

Nice. That’s a Kurt Wagner version, but I like it. Think of another one for the next one.

[ad]

And we’re back with Ed Lee from Recode. He’s a managing editor who also was a media reporter in a previous life, talking about the Time-Warner/AT&T merger and whether it will go through. So, if it does go through, would you think it might, or you don’t know?

I think the chances are higher now. I think it’s probably a 60 or 70 percent chance that AT&T wins or that they prevail.

And then they get to just buy it. That’s it, right?

They just get to buy Time-Warner. The thing is there’s sort of a detail that’s worth pointing out here. AT&T offered what’s known as blackout arbitration. Basically, the government was concerned if you buy Time-Warner you’re going to blackout Time-Warner channels to other pay TV providers, and that’s bad for consumers, etc., etc. So then AT&T said, “What we’re going to do is we’re going to offer what’s called blackout arbitration, so we agree to not blackout any Time-Warner channels to any pay distributor if we have a dispute over fees.”

Mm-hmm.

“We’ll just leave it on and we’ll go to third-party arbitration. They will determine what a fair and reasonable fee should be to carry those networks going forward.” That was a huge concession, actually.

Yeah.

Even before the trial started, which is to say that like our ...

That’s a good deal.

Yeah. Our biggest negotiating tactic, we’re going to take it away. That’s actually something that, again, it’s if AT&T does win, that is probably an aspect that will allow it to win. In other words, the judge will consider, oh, you’re going to allow this third-party arbitration.

That’s the big worry, right.

Then I feel comfortable letting this go through, right. Exactly.

Yeah, because it is so politicized otherwise, and the immediate effects would be what happens on Day One of that?

Well, I think right away, I think things, they’ll run as usual, right? I think Time-Warner does its thing, AT&T does its thing. That’s the other thing to kind of point out here, is even after Time-Warner gets absorbed into AT&T, Time-Warner channels — HBO and Turner and all these networks, CNN — will still be available to the other pay TV distributors.

Right.

Like Comcast, like Charter, in the same way it was before and presumably at the same rate.

Yeah. Why not?

The concerns about you’re not going to be ... Yeah, right. So, that was the concern that the media was making.

That’s an old concern.

It’s an old concern, but here’s the thing about covering the media business for so long, what’s interesting is because of the structure of the way TV economics works, the structure of these deals are built around paranoia. In other words, even before AT&T was looking to buy Time-Warner, every distributor out there was concerned that I’m paying more for HBO than the next guy.

Mm-hmm.

So they would build in these things into these contracts called most favorite nation clauses. Basically, if Charter thinks that they’re getting overcharged for HBO or Turner, than Comcast is paying, they’ll say, there’s a clause in their contract that says, no, no, you’re giving me the best possible rate that you make available to others.

Right.

They even do something called MFN audits where if they’re really concerned they can get a third party to audit Comcast’s contract and make sure that they’re in line with each other. The point is that protections are built in to these contracts to begin with because everyone’s already paranoid.

Yeah. Absolutely. But the thing they gave in is a big deal. It’s a big deal.

That was huge, giving it the arbitration for no blackouts, that was a big concession and it shows you just like AT&T’s appetite for making this deal happen.

Making this deal and they really want it. They want this to go through. In terms of media effects, regular consumers being affected, they’ll still see these stations, right? They’ll still ...

They’ll still see these stations. They’ll probably pay about the same. AT&T claims that consumer prices will actually go down. It might, or it might go up, but not prohibitively more.

What about other products? Are they going to do the silly, like, “It’ll now be on your phone,” that kind of thing?

Right, so this is the part of the deal that I don’t quite get.

Yeah. Nobody does.

Despite this whole addressable advertising, exactly, and you know, new types of online video, I mean that’s really why you’re spending $85 billion to buy Time-Warner? Couldn’t you just have done that as a joint venture or some kind of a business deal? Did you have to buy them outright?

Yeah.

Or if your concern is what’s happening in a Netflix world now, couldn’t you spend $85 billion building your own Netflix?

No. They couldn’t.

I think they were certainly too late to do it, so you buy something that includes HBO, which is a nice business and has lots of nice content. You figure out a way to create new video, online video, something on your phone, etc. I don’t think there’s going to be a massive, massive change. I think if you’re an AT&T customer and you have an unlimited data plan, chances are you might get more free video with that plan courtesy of Time-Warner.

Right.

That might be some immediate changes, but for the most part, you know, you’re just going to see more of the same networks going online. That’s what I think it’s going to do.

Yeah, so the key part is that they’ve got to keep things like HBO and the other channels fresh, right, Cartoon Network.

Yes.

You know, my kid loves the Cartoon Network. What’s the show on there I can’t remember, that he loves? The little tiny, I don’t know. Anyway, they’re very popular. They have to remain innovative just the same way internet stuff has to remain innovative, right.

Right, exactly.

HBO’s got to keep churning out the hits, essentially.

That’s a good point that you bring up, HBO, because Richard Plepler who runs HBO, really smart guy, knows the business really well. I mean, I think part of the concern he probably has is that, well, if Netflix is spending $6 billion and I’m spending a little less than that, shouldn’t I make up that difference?

Mm-hmm.

Isn’t that a concern? And I think one of the key questions should be, well, if AT&T successfully buys Time-Warner, will they give more money to HBO?

They have the appetite for the spend.

Right, exactly. You do have more money to spend.

Because there’s not just Netflix. It’s Google and Apple, Amazon.

Right. It’s a much bigger world. You’re not just competing against other TV companies, you’re competing against the internet.

Which is why you’d want AT&T, right, because it has a lot of money.

It has a lot of money, has lots of cash. Yeah.

Is the Plep going to stay? Hi Plep. Is the Plep going to stay?

You know, my money’s on him staying for a while, but I think it will be contingent on Randall Stephenson telling Plepler, yes, I’ll give you more money.

Hands off.

I think that’s going to be ...

I don’t mind controversy.

Right.

I don’t mind, you know, that kind of thing. It’s interesting because Comcast has kept their hands off of all the fights that NBC is having with Trump, or Trump’s having with NBC, really.

Right. Comcast is actually, yeah, they’re not doing, they’re not trying to change coverage, right.

Yeah. It doesn’t seem like it so far.

Doesn’t seem like it, not that we know. Who knows.

Nah. It doesn’t seem like it.

I mean, some reporting might show something else. Yeah. It doesn’t strike me that way either. I think NBC’s been pretty independent.

Yeah, so AT&T’s got to get comfortable with that, like stay out of controversies that CNN might have with ... There was an idea that they were going to sell CNN, right, too, as we talked about before. Could that still happen?

Well, so yeah.

Where Jeff goes.

There’s been a lot of back and forth in the reporting.

Yeah.

That Zucker goes and they put someone else in charge of CNN. But here’s the thing: CNN is an independent news operation.

Yeah.

No matter who’s in charge, the reporters are still going to report out the stories.

Yeah.

And I think, you know, if they’re ...

That would be bad if they got rid of Zucker. He’s a talented guy.

Right.

Whatever you think of him, he knows how to make TV.

He knows how to make TV and “The Apprentice” is a good example of that, ironically.

Yeah.

In terms of making a ratings hit.

Yeah, although CNN’s numbers are down a tiny bit, I think. I forget.

They’re down a tiny bit.

They go up and down, right.

They do go up and down, but since Trump, frankly, it has gone up, as has MSNBC.

Yeah. It’s a gift.

I think, you know, it’s sort of a boon time for political coverage and both CNN and the other networks have done a good job.

And then Breitbart and Fox has gone down because there’s no ... How many times can you talk about Hillary’s emails?

They can only go down, right. That’s a good point.

Hillary’s emails. What about Hillary’s emails?

And they’re still harping on that. I mean, every night on Fox News.

Oh my God. My mom called me the other day and she said, “What about Hillary’s emails?” I’m like, “Oh my God, stop.”” Like, get a new meme. Get a new one. Something. Something. Find another Democrat to smack around. Like, Schumer doesn’t work for them, I don’t think. He doesn’t make them all mad. But it is. It is a game show. The whole thing’s ridiculous.

But they want to own it. AT&T wants to own it. So you think it’s going to go through and then you’ll just see. And the other executives ... John Martin was onstage at Code Media and was pretty, like, “Screw the Justice Department.”

I think he sticks around, too.

He was pretty forthright.

Oh, he made a great case. He’s like, basically, the government, they’ve lost their mind on this case.

Right.

Which, you know, if you really want to get down to it, yeah, he’s probably right. Their argument for this didn’t really line up and they had all these experts that they presented. The experts were basically cross examined and admitted to, yeah, this doesn’t quite work the way that we thought it would. That’s why AT&T’s presenting a really strong defense, really strong case.

Right.

Just the nature of the deal shouldn’t be subject to this kind of scrutiny.

Oh my goodness. It’s ridiculous.

Back to your other question, though. What else happens? It’s not just this one thing. If AT&T succeeds in this it actually might give other media companies the leeway to do other big deals.

Right.

You mentioned earlier, Disney and Fox. Guess what? Comcast also made a bid for Fox.

Yeah.

They actually made a richer bid. They offered more money and Fox actually turned them down. Rupert Murdoch turned them down not because they didn’t think it was high enough but because of regulatory concerns, meaning, “You already own NBC and there’s this AT&T case pending.”

So there could be more of these mergers, right?

“And we are concerned that if we say yes to you ...” right, exactly. It won’t happen. But if AT&T succeeds, Comcast might actually come back and say, “Hey, Fox. We still want you. We’re going to give you even more money now.”

Oh, man.

Yeah.

Does that mean I get to go on Fox News?

That’s where it gets really interesting.

Let’s be clear. NBCUniversal is an investor and so is Comcast, a venture arm, in Vox Media.

Vox Media owns Recode, which owns this podcast, so we’re happy to be discussing our benefactors.

Nobody owns this podcast but me.

Exactly. Just to be clear, if there were to be a deal — and this also includes the Disney deal — Fox News is not part of that. Fox News will stay with Rupert Murdoch.

Yeah.

He would basically sell them almost everything else.

Yeah. He’s not letting that go until they pry it from his cold dead hands, right?

Oh my God. He cannot have that. He cannot have that. He cannot have the New York Post. Like those two things he has to have.

I mean, even then he’ll lose something. You ever notice how he looks like the guy who played Dracula on Gary’s ... remember that movie with Winona Ryder? Go look at the picture. He looks a lot like him.

Oh, yeah. The big forehead. You’re right. Yes. Yes.

Mm-hmm. Just look it up.

He reminds me of that.

He does. He’s Dracula. Who knows. I never turned my back on Rupert Murdoch when I worked for him. I’ll just say that. Never turn your back on that guy.

He showed up at the conferences, AllThingsD conferences, right? He sat in the front row.

He did. He did. That was a little scary, but there he was. Hello. Whoa. Sitting next to Martha Stewart. That was a strange time. That was a strange, strange time.

Well, it didn’t stop you from doing your interviews the way you normally do them.

Apparently. Yeah. We did one with Rupert that was actually pretty good.

Yeah. We should ask for him back, actually, don’t you think?

We’re having James Murdoch at Code.

I know, James is going to be there. Also, Randall Stephenson’s going to be at Code. We were talking about him.

Yes. Exactly. Randall Stephenson. We got them all. We got Spiegel. We got others. We may have some Facebook executives. I’m not going to say. There’s one particular one I’d like to get in that chair again.

If the merger goes through, what would the impact on AT&T and Time-Warner’s competitors be? Then we’re going to go to another break. So, what is the impact? There could be a free-for-all in buying these things, right?

There could be a free-for-all in buying these things. I think you’re going to see more consolidation happening in the media industry, like we’re talking about.

Like what else? What else?

Well, look. There’s also Viacom and CBS. They’re looking to merge. That’s going to probably happen anyway in some form, in some way. Shari Redstone — who’s appeared at our conferences in the past, who runs, who effectively controls both those companies — wants those companies to re-merge. The reason why is the same reason why AT&T is buying Time-Warner, which is the media landscape, the media business is just getting smaller. They’re having a tougher and tougher time.

Then who buys them? Who buys CBS then? What, like Apple or Google?

So if I were an adviser, if I were one of these big investment banking advisers, I would tell Jeff Bezos to buy CBS.

Yeah. What about Jeff Bezos buying Netflix?

I think Netflix is actually getting kind of expensive now. I think it’s going to be a harder thing to buy. It has a lot of debt already.

Yeah. Still.

So it’s sort of acquisition-proof that way, almost, in a strange way.

In a way. We’ll see. But things are going to get bought.

But CBS is a cash cow.

Things are going to get bought, right?

Things are going to get bought. There’s going to be more being bought.

That’s a good idea, Jeff Bezos buying CBS.

It doesn’t necessarily mean that TV’s getting, you know, more powerful. It actually means that they’re getting less powerful. That’s why they’re consolidating. It’s the Googles and the Facebooks and the Apples and the Amazons of the world that are getting bigger and doing more video and planting a lot of the traditional.

Do you think Apple will buy one?

You know what? I feel like Apple, they can’t spend more than $3 billion on any one thing, right?

I don’t think they would.

They don’t have an appetite to make big deals.

It doesn’t seem to want to run a network. Google is also sort of on-the-fence-y about that kind of stuff.

They still don’t understand the media business. They don’t understand the media business is an expensive thing to run.

What about Facebook?

Facebook too. I think Facebook is getting smarter about it, frankly. I think they’re getting more strategic and not being so ...

Would they buy one of these? God, what a mess he’d buy for this.

He would.

He’s worried about the Russians.

That would be something. But you know, Facebook is trying to get more. This is also true of Amazon and Google. They’re trying to own more sports rights.

Right.

Rights to the NFL games, rights to MLB games, and they already own some of these things, and I think, you know, if they take a deeper look they’re like, oh, CBS already owns a lot of these rights and they’re really good at producing these programs around them, so maybe we just do that then.

Mm-hmm.

So if they really want to take it to its logical conclusion, that would be one way to go instead of just nibbling at the edges like they’ve been doing.

Everyone is, “Oh, let’s talk about that!” and then it never happens, which is interesting. All right. We’re going to take another quick break for a word from our sponsors, and we’ll be back with Ed Lee from Recode, which ... we’re going to have some questions from readers. Ed, one more time, give me a better hashtag money, please.

Hashtag money!

All right, Kurt Wagner.

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We’re back with Ed Lee from Recode talking about the attempted merger of AT&T and Time-Warner and some other media confabulations going on or is going to come. We’ve got some questions for him, but first we’ve got a couple questions here from our listeners. We have two here from our loyal question asker, Liz Weeks. “Do we have a read on how sympathetic Judge Leon is to AT&T’s framing and how does this antitrust action by the DOJ compare to M&As by Sinclair Broadcasting?” We forgot them. They’re in the Trump camp.

Sinclair. Wow. Yes. Yeah.

He’s sympathetic, right? That’s what you said, essentially.

Well, he’s sympathetic in the sense that he doesn’t quite understand the government’s case. The other thing to point out, Judge Leon here, the judge who’s overseeing, who’s going to make the decision, he oversaw the Comcast-NBCU merger, which he allowed to go through with conditions. So he’s pretty familiar with the landscape. I get the sense that he, it’s one of those things, “I’ve seen this story before. I have issues too, but for the most part I think it’s fine.”

Yeah.

The Sinclair thing, for listeners, it’s all the local TV stations that in a lot of ways control a lot more of the TV news that you see than you otherwise realize.

Right.

You know, that deal where they’re going to buy more stations and it’s run and owned by this conservative family basically, pushing the Trump agenda more so in a way than Fox News ever does, I think that’s kind of a bigger concern in terms of news proliferation, right, the concern about ...

There’s no antitrust action by the DOJ there.

There is no antitrust action on that. There are conditions that they’re basically ... The Justice Department is telling them, “Well, you can’t buy that many stations. You need to sell a few.” I think that’s the condition that’s being placed on that deal, but that’s probably going to go through and they’re going to be very powerful and it’s going to be most of your nightly newscasts are going to probably be Sinclair produced, and that’s a concern in terms of news diversity.

God. They don’t even hide the bias here. It’s fascinating. They will put on something, which they used to do for all of them. They used to just be pro these businesses, all of them, no matter what side they were on, but here they’re cherry-picking, it looks like.

They are cherry-picking, and that’s the other irony around this is that Trump was supposed to be the pro-business president, leave business alone, and he’s meddling in a lot of these deals.

Well, CNN gets him mad. He literally went off today on the Fox ... Even the “Fox and Friends” guys were like, “Whoa, slow down. Slow down, dude. You’re getting a little bit off your meds there.” It was like crazy.

Well, and that’s the criticism, right, is if he keeps at it in this way he’s basically delegitimizing or continues to try to delegitimize real news services.

Right.

Whether it’s CNN or NBC or anyone else.

That’s the goal, right.

That’s the goal. And it just, no matter what these outlets are reporting, people take it at face value, this is wrong or this is fake news, and that’s where Trump is.

I know. It’s totally. I don’t want to get on a media high horse, but it’s ridiculous, really. I don’t want to be all high dudgeon, but this is just, this is just, they’re not even hiding it anymore, which is sad. So, adding to that question, how does the thinking behind the merger compare to Disney and Fox? We talked about CBS and Viacom. Those look like they probably will sail through. Probably.

Those will probably go through. I think the Disney-Fox thing will go through and CBS-Viacom in some form, although that particular deal, CBS-Viacom has issue with Les Moonves who runs CBS. It’s more of a personal thing between him and Shari Redstone. Shari controls both companies. Les just wants his own management. He doesn’t want to do that merger, but he understands that he doesn’t control both these companies, so he knows it’s going to happen. He’s basically saying, “I’ll let it happen, but I need to have final say. I need to run this combined entity.” Which I think was fine except Shari wants certain executives in place.

Yeah. She’s the owner.

Who people see as her proxies. Right. She’s the owner.

She owns it. Too bad.

Les is saying, “Ah, I don’t think so, Shari. I don’t want that hanging over me.”

He’s iconic at that company, obviously.

He absolutely is. Exactly. That’s another good thing to bring up, that he’s noted as this genius programmer. He knows what’s ahead. He knows how to get people to turn on their TVs to CBS every night. That’s an art. That’s an art that’s sort of dying, in a lot of ways.

Yeah. There’s been a million. The thing is, the only problem is if you’re not known you’re not known, right.

Right.

Like ultimately that’s in the end. Everyone talks about how brilliant all these programmers are, but you know what? I’ll give you a little piece of advice from my grandmother: The graveyards are full of indispensable people. See what I’m saying?

There you go.

There you go.

We’re at the twilight of the media moguls.

Not you, Ed, but everybody else.

Not me. Okay. Fine.

We got a question via email from Ernest Villicana. He was a vice president at Time-Warner Cable for 10 years. He says he feels motivated to speak out against the deal because he lived through the AOL-Time-Warner merger. It was a long email, but I’m going to summarize. Ernest thinks AT&T has a bad record of success in the pay TV business including U-Verse and DirecTV. He says huge firms like Telco TV or Ma Bell failed to succeed in the media business and even if the merger fails, the CEOs and executives will get huge windfalls. So, Ed, Ernest is against the merger. What do you think of his arguments? Because they were bad before. I think everyone was bad before. Look at Go90 at Verizon.

Well, that’s the thing. I think it’s fair to point out AT&T probably hasn’t been great at pay TV, but owning Time-Warner doesn’t change that.

Yeah.

Time-Warner is not an expert in delivering television. They’re an expert in making television.

Right.

Those are two different disciplines. Again, owning that doesn’t make your pay TV better or worse.

Yeah. Right.

Your TV is going to be better or worse because you’re making it better or worse. Owning Time-Warner doesn’t help you or make it in either case. So yeah, the onus is on AT&T to improve that business and I think they want to. That’s what they’re trying to do. They’re probably thinking that owning the content adds more motivation, make sure that they have stuff in their back pocket.

It’s also a way to differentiate AT&T from Verizon. Right now, cellphone services are basically commodity services. It’s just a matter of price at this point, and so they need to find a way to make themselves look better and stick with AT&T because HBO, whatever, that you might get on your phone ...

Or that it’s just another thing to own.

It’s just another thing to own.

You know what I mean?

It adds to your bottom line.

Right. Right.

Again, I don’t think, to be frank, I don’t think AT&T gets a boost necessarily by owning Time-Warner. They may get a small boost, but not a big one, so I think it’s a fair point. I don’t think it should stop them from buying it, though, because they’ll somehow make Time-Warner worse.

Mm-hmm.

That’s the big question: Will they be a bad content owner?

Content owner.

Right.

Will they keep their mitts off or will they be a force for change and innovation because some of these media companies are a little slow, right? Like, they’re not really into the future.

They’re very slow. Yeah. I mean, this is why Netflix was able to get to 125 million subscribers in no time, because everyone else was just asleep at the wheel. Like, yeah, whatever, we’ve got our content.

Reed Hastings, CEO of Netflix, is forging ahead and cutting big deals and being really aggressive and ambitious and everyone else is just sort of like, yes, we’re doing our TV thing and programming is hard, but they’re doing very little online or not doing enough online.

They are not. They’re just thinking over the top and this and that. It’s interesting how much our practices have changed, how much TV ... I only watch live, say, news, and then everything else is either on my phone or something else.

My 13-year-old daughter does not watch linear television at all, which is to say she doesn’t watch live TV. She doesn’t know what that is.

But she watches “The Simpsons” on repeat or something like that.

She’ll watch “The Simpsons” on repeat or she’ll watch ... “Brooklyn 99” is one of her favorite shows. She watches that on Hulu with no commercials. That’s just how she understands television. She also watches Instagram videos. Between that and, you know, things on Hulu or Netflix sometimes simultaneously, by the way.

Something else to watch. All right, Ed, we’re going to wrap up soon, but any other big media stories you think are coming? What’s your prediction of the big media story?

I think the next big media story is going to be relatively small in a way, though, which is what happens to Hulu.

Yeah.

Right.

It’s owned by everybody, right?

A consortium. But Disney buying Fox includes Hulu, which means they get control of Hulu. Comcast does not like that because Comcast owns 30 percent of it. I think they want Hulu as well. I think there’s going to be a fight over who really owns Hulu in the wake of all of these deals happening. After the AT&T case wraps up, if AT&T wins it’s going to be a free-for-all in terms of all the big media mergers, and I think Hulu is going to be one of those things that’s up for grabs.

Yeah.

That’s the next thing to look for.

All right. That’s an interesting one. Yeah. That’s been a long, slow fall down the stairs, although they produce amazing stuff now.

They do.

“Handmaid’s Tale” is just coming on this week.

“Handmaid’s Tale” is awesome.

It is awesome.

It’s a great series.

I did a great interview with the showrunner of it, Bruce [Miller].

Yes.

It was fascinating. Still, it’s disturbing this season. I just sometimes can’t watch it. Like, you know what I mean?

It’s too close to home. It’s too close to home sometimes.

Honestly. Between that and “Homeland,” I’m like, I get a stomach ache. So, I don’t know.

Anything else? Anything? Newspapers? Anything?

Oh, newspapers. Like, if you’re not [using] a paywall, it’s that much harder, which means if you’re not the New York Times or the Washington Post or the Wall Street Journal, you’re just having a really tough time, and even those papers ...

And even Vanity Fair just added a paywall, right?

That’s the thing. I mean, how many things can you pay for? How many things are people willing to pay for?

What do you pay for, Ed? What do you pay for?

I pay for everything. I’m an old-school media guy.

Are you?

I pay for all of these things.

I pay for the Washington Post.

I pay for cable and Netflix and Hulu and the New York Times and the Wall Street Journal. I pay for everything.

Yeah. I think we pay for a lot of the same things. I just paid for something called We Croak. 99 cents.

What? What is that? What do you get?

They give you five quotes about death a day. Apparently, if you’re reminded of death five times a day you’re a happier person. I like it. It’s a quote.

Whoa.

It’s a different quote. I’m telling you. Like, I just got one.

And you’re paying for this privilege, to get [death quotes] for money.

Yes, 99 cents. It’s the best 99 cents I’ve ever spent. I’m giving an ad for these guys.

Wow, Kara. Okay.

This is what I just got: “It is necessary to meditate early and often on the art of dying to succeed later in doing it properly just once. Umberto Eco.” Thank you.

All right.

I’m just saying.

That’s the 99 cents for the day.

A little death mixed in there. I’m just trying to make people happy. Anyway, this has been another great episode. Ed, thank you so much for joining me.

Of course. This was fun.

This article originally appeared on Recode.net.