Media

Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Donald Trump may be one of the best things to happen to the New York Times. For CNN, the same is only half true.

Shares of New York Times Co. rose for a third day this week after the $2.2 billion newspaper publisher reported a record number of new online subscribers for the fourth quarter and said it exceeded 3 million total paid subscriptions. Revenue and earnings also beat estimates as digital circulation and advertising revenue helped offset continued steep declines in print ad sales. 

Speaking on the company's earnings call Thursday, CEO Mark Thompson referenced a tweet by President Trump from Jan. 28 that said the Times's readers were "dwindling." "Not so much, Mr. President," said Thompson.

It's no coincidence that the Times signed up 276,000 digital customers in the same period as Trump's election. While the president's attacks on the news media -- and at times, the Gray Lady specifically -- certainly may have the effect of turning some Americans against certain outlets, his controversial policies and conflicting statements have lured others back into paying for their news again.

The question now is, will this boost last? The Times isn't likely to have a subscription surge of this magnitude again, but investors sure seem confident. Maybe a little too confident:

Extra, Extra
New York Times is now trading well above analysts' 12-month price forecasts
Source: Bloomberg

Then there's CNN, the network President Trump bashes most. Its ratings surged 84 percent last year. But while that was a welcome boon, Trump is complicating business for CNN's parent company Time Warner Inc. in other ways. Time Warner, which also counts TBS and HBO among its channel lineup, is in the process of selling itself to AT&T Inc., the wireless provider willing to bet $109 billion that mobile video is the future. 

The president has called this merger -- as well as Comcast Corp.'s years-old purchase of NBCUniversal -- a "poison" to democracy and an example of "the power structure I'm fighting." Can he block the deal? Technically, no, and especially not because he's simply displeased with Time Warner's CNN division. As this handy Bloomberg QuickTake explains, the power rests with the Justice Department and Federal Trade Commission, as well as the Federal Communications Commission when it comes to certain media deals. Further, it's hard to argue that an AT&T-Time Warner merger is anti-competitive since the two companies don't currently compete. 

Volatile Spread
While merger-arbitrage traders have become more optimistic that the AT&T-Time Warner merger will pass regulatory muster, they're still pricing in just a 59% probability of completion
Source: Bloomberg

But even if the merger can get done, it will take a while and CNN creates a lot of headline risk for arbitrageurs wagering on the transaction in the meantime. The more Trump calls out the network -- like he did at a press conference the week before being sworn in -- the more nervous investors could get about a deal involving the parent company. 

There's even been talk of spinning off CNN to facilitate the AT&T-Time Warner merger. The network may be valued at $6.5 billion, based on an analysis by Bloomberg Intelligence. 

So what's good for CNN's ratings may not necessarily be so good for Time Warner. Even if the deal can close, Trump is sure to make it a bumpy ride for investors. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Other sites, including the Washington Post (owned by Jeff Bezos, the billionaire founder of Amazon.com Inc.), noted surges in online traffic and subscriptions last year. 

To contact the author of this story:
Tara Lachapelle in New York at tlachapelle@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net