Heisenberg Report

Dear AT&T, Paul Singer Is Coming And Donald Trump Is Tweeting – Enjoy!

Donald Trump lashed out at CNN on Monday, as he’s wont to do, in the process weighing in on a big market story and throwing the power of his office behind what will probably turn into a contentious back-and-forth between one of the world’s most notorious investors and CNN parent AT&T.

Great news that an activist investor is now involved with AT&T”, the president exclaimed. That activist: Paul Singer, whose penchant for putting the fear of God into his targets is legendary.

Shares surged on Monday after Elliott Management unveiled a $3.2 billion stake in a letter outlining a “value-creation opportunity” that Elliott claims can propel AT&T shares to massive gains over the next several years.

“The purpose of today’s letter is to share our thoughts on how AT&T can improve its business and realize a historic increase in value for its shareholders”, the letter (embedded in full below) reads.

Here’s the bit on Time Warner:

Time Warner: In 2016, AT&T announced its most significant bet, the $109 billion acquisition of Time Warner. Time Warner is a spectacular company, representing a collection of some of the world’s premier media assets,and it remains a strong and valuable franchise today. However, despite nearly 600 days passing between signing and closing (and more than a year passing since), AT&T has yet to articulate a clear strategic rationale for why AT&T needs to own Time Warner. While it is too soon to tell whether AT&T can create value with Time Warner, we remain cautious on the benefits of this combination. We think that, after $109 billion and three years, we should be seeing some manifestations of the clear strategic benefits by now. We aren’t alone in our cautious outlook – Jeff Bewkes, the CEO who sold Time Warner to AT&T, recently referred to the vertical integration of content and distribution as a “fairly suspect premise.”

AT&T has responded, in boilerplate fashion for now. Here’s the official statement, as plastered on the screens of CNBC viewers Monday:

Trump explicitly suggested that Elliott look to influence editorial policy at CNN as part of its efforts.

“As the owner of VERY LOW RATINGS CNN, perhaps they will now put a stop to all of the Fake News emanating from its non-credible ‘anchors'”, the president suggested. “Also, I hear that, because of its bad ratings, it is losing a fortune”.

To call this wildly inappropriate would be to grossly understate the case, but consider the source.

Trump wasn’t done. More “importantly” than the all the money CNN is hemorrhaging according to his calculations (scribbled in crayon on the back of a McDonald’s napkin he found at the bottom of a Happy Meal bag, one imagines), is all the damage the network is doing to America’s otherwise sterling reputation, the president said.

“CNN is bad for the USA. Their International Division spews bad information & Fake News all over the globe”, he seethed, before making the wholly ridiculous claim that unnamed “foreign leaders” are “always asking” him the following question:

Why does the Media hate the U.S. sooo much?

It goes without saying that the idea of world leaders randomly asking Trump why CNN “hates” America is just as laughable as the prospect of random African Americans calling the White House to thank the president for telling the world that Baltimore is a “rat infested” mess (a claim Trump made in late July).

Ultimately, the president said CNN is “a fraudulent shame” and the problems “all come from the top!”

Earlier this year, he suggested Americans boycott (or “stope using”, as he put it) AT&T until CNN changes the way it treats him. “I believe that if people stoped using or subscribing to @ATT, they would be forced to make big changes at @CNN!”, Trump tweeted in June.

Now, he’s imploring Paul Singer to fix the situation for him. Singer donated to Republican super PAC “Future45” ahead of the midterms last year, and has a notoriously complicated history with the Trump White House. Steve Bannon once pledged to “go off the chain” to destroy Singer after the New York Times revealed that The Free Beacon (which is funded by the billionaire), hired Fusion GPS in 2015 to dig up damaging information about several presidential candidates, including Trump. Singer, a one-time “Never Trumper”, donated $1 million to the president’s inaugural fund, and following a visit to the White House, Trump described him as someone who “was very much involved with the anti-Trump”. In the same breath, the president said that “Paul just left, and he’s given us his total support and it’s all about unification”.

We could spend hours editorializing and writing jokes around this story, but for now, suffice to say that AT&T would probably have rather spent Monday doing something other than listening to Trump yell at them on Twitter while planning a response to Paul Singer.

But hey, at least the shares are up.

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