A Reuters report published today with the title “How AT&T helped build far-right One America News” alleges that the telecom giant played a significant role “in creating and funding OAN, a network that continues to spread conspiracy theories about the 2020 election and the COVID-19 pandemic.”

While there’s no evidence or allegation that AT&T played a direct role in creating OAN, Reuters points to a court case in which OAN’s founder said he created the network after AT&T “told us they wanted a conservative network.” OAN also apparently gets the vast majority of its revenue from a carriage deal with the AT&T-owned DirecTV, which is by far the largest cable or satellite TV provider that carries the channel. OAN is carried by providers including DirecTV, AT&T U-verse, Verizon FiOS, and CenturyLink, but not by large cable operators such as Comcast, Charter, and Cox.

OAN owner Herring Networks claimed in a 2016 lawsuit that AT&T promised to carry OAN on DirecTV in exchange for OAN’s public support of AT&T’s attempt to purchase the satellite provider, which required government approval. OAN’s lawsuit claimed that AT&T reneged on the deal once its purchase of DirecTV was finalized in 2015. OAN finally got on DirecTV in 2017, weeks after agreeing to drop its lawsuit against AT&T. Herring also claimed in court that AT&T in 2013 proposed acquiring a 5 percent ownership stake in Herring, but that purchase was never made.

When contacted by Ars today, AT&T provided a statement saying it never invested directly in OAN:

AT&T has never had a financial interest in OAN’s success and does not “fund” OAN. When AT&T acquired DirecTV, we refused to carry OAN on that platform, and OAN sued DirecTV as a result. Four years ago, DirecTV reached a commercial carriage agreement with OAN, as it has with hundreds of other channels and as OAN has done with the other TV providers that carry its programming. DirecTV offers a wide variety of programming, including many news channels that offer a variety of viewpoints, but it does not dictate or control programming on the channels. Any suggestion otherwise is wrong.

AT&T “wanted a conservative network”

The Reuters story is based almost entirely on court documents but doesn’t provide any of those documents or even say which courts they were filed in. Reuters described one of the court cases as “a labor lawsuit brought against OAN by a former employee and unrelated to AT&T,” apparently referring to a racial-discrimination case in which a San Diego County Superior Court jury last year awarded ex-employee Jonathan Harris nearly $290,000 in damages.

A deposition in the labor lawsuit revealed AT&T’s request for “a conservative network,” Reuters wrote:

OAN founder and chief executive Robert Herring Sr. has testified that the inspiration to launch OAN in 2013 came from AT&T executives.

“They told us they wanted a conservative network,” Herring said during a 2019 deposition seen by Reuters. “They only had one, which was Fox News, and they had seven others on the other [leftwing] side. When they said that, I jumped to it and built one.”

Since then, AT&T has been a crucial source of funds flowing into OAN, providing tens of millions of dollars in revenue, court records show. Ninety percent of OAN’s revenue came from a contract with AT&T-owned television platforms, including satellite broadcaster DirecTV, according to 2020 sworn testimony by an OAN accountant.

OAN certainly provided what it claims AT&T asked for. “OAN’s influence rose in late 2015, when it began covering Trump rallies live, at a time when some of the media still saw the New York celebrity businessman as a longshot presidential contender,” Reuters wrote. “The network continues to shower Trump with attention and often provides a friendly platform for his Republican allies. As president, Trump frequently urged supporters to watch OAN.”

Herring alleged quid pro quo

The other lawsuit that Reuters alluded to is Herring Networks v. AT&T. It was filed in March 2016 in US District Court for the Central District of California and dismissed at the request of the parties in March 2017. The complaint alleged that AT&T misled Herring about its intentions for the U-verse wireline TV platform. “When the parties negotiated and entered into their agreement, AT&T led Herring to believe that U-verse TV—AT&T’s new television distribution service—would continue to expand and grow. But unbeknownst to Herring, AT&T had decided to acquire DirecTV and wind down U-verse, i.e., move AT&T’s pay-TV customers to the DirecTV system,” the complaint alleged.

The complaint further claimed that “AT&T promis[ed] to put Herring’s channels on DirecTV in return for Herring’s support and lobbying with governmental regulators in favor of AT&T’s $65 billion acquisition of DirecTV” but that “[a]fter AT&T got Herring’s support, and the acquisition was completed, AT&T reneged on its promise and agreement to put Herring’s channels on DirecTV.”

In a May 2016 declaration in that lawsuit, Herring Networks President Charles Herring, the son of Robert Herring Sr., described an October 2013 meeting with AT&T executives Aaron Slator and Ryan Smith. They offered a deal that had been authorized by AT&T’s then-CEO Randall Stephenson, Charles Herring told the court:

During that meeting, Mr. Slator proposed that AT&T acquire a 5 percent ownership stake in Herring so that Herring’s channels would become AT&T-affiliated channels. Once that happened, Mr. Slator said, AT&T would “put” Herring’s networks to DirecTV, i.e., require DirecTV to carry our networks under the terms of a “Put Agreement” between AT&T and DirecTV. Mr. Slator told me that Randall Stephenson, CEO of AT&T, both instructed him and gave him the authority to propose this “Put Agreement” to Herring on behalf of AT&T, the parent company in Dallas, Texas. I accepted Mr. Slator’s proposal on behalf of Herring (the “Put Right Deal”).

Herring lobbied for AT&T

AT&T announced a pending agreement to purchase DirecTV in May 2014. Shortly after that announcement, Charles Herring visited AT&T’s Los Angeles office. He told the court:

At that meeting, Mr. Slator told me that Randall Stephenson, AT&T’s Chairman and CEO, no longer wanted to move forward with the Put Right Deal… because Mr. Stephenson did not want to affect the acquisition and his negotiations with his then-counterpart at DirecTV, Chairman and CEO Mike White. Mr. Slator said that, instead, Mr. Stephenson authorized Mr. Slator to offer Herring a different deal. Mr. Slator proposed that if Herring publicly supported AT&T during the acquisition process, AT&T would cause DirecTV to carry Herring’s networks after the acquisition.

“Charles accepted Slator’s terms,” and the parties agreed to a deal in which DirecTV would pay over $100 million in licensing fees over five years, the lawsuit said.

“At AT&T’s direction and in reliance on the parties’ agreement, Herring did everything AT&T asked to obtain governmental approval of the acquisition,” the lawsuit claimed. Herring “filed briefs with the FCC in support of the [AT&T/DirecTV] acquisition and against the Comcast/TWC merger, including one that was ghostwritten by AT&T,” and he “invited AT&T to utilize OAN’s news programs to cast a positive light on the acquisition and advocated for other issues affecting AT&T’s business,” the lawsuit said.

Charles Herring’s 2016 declaration described one more meeting he had in October 2014 in the District of Columbia with James Cicconi, who was then AT&T’s senior executive VP of external and legislative affairs:

Mr. Cicconi told me that he was responsible for ensuring that AT&T successfully completed the acquisition of DirecTV. Mr. Cicconi thanked me for Herring’s work in support of the acquisition. Mr. Cicconi reiterated the DirecTV promise that Mr. Slator had made to me several months earlier. Mr. Cicconi confirmed that, since Herring had performed its end of the bargain, AT&T would get Herring’s networks carriage on DirecTV after the acquisition. Mr. Cicconi told me that he had authority from his superiors at AT&T Inc. in Dallas, Texas, to make this promise on behalf of AT&T Inc.

AT&T completed its acquisition of DirecTV in July 2015 and did not include OAN in its roster of channels for nearly two years. OAN finally launched on DirecTV on April 5, 2017, a little more than two weeks after a federal judge granted a joint stipulation to dismiss the lawsuit filed by Herring against AT&T. No settlement was mentioned in that filing, but the litigation was no longer necessary once the AT&T-owned DirecTV agreed to pay for OAN.

AT&T denied that it promised to carry OAN in exchange for the company’s support of the DirecTV merger. “Support for the merger was never a condition of or part of any content agreement,” an AT&T spokesperson told Ars today. DirecTV also carries the Herring-owned network called A Wealth of Entertainment, formerly known as Wealth TV.

OAN’s value without DirecTV “would be zero”

AT&T’s purchase of DirecTV was a financial failure. In August, AT&T completed a spinoff of DirecTV after six years of mismanagement in which nearly 10 million customers ditched the company’s pay-TV services. AT&T still owns 70 percent of DirecTV, but the satellite provider now operates more independently of its parent company.

“The decision of whether to renew the carriage agreement [with OAN] upon its expiration will be up to DirecTV, which is now a separate company outside of AT&T,” AT&T told Ars today.

The exact amount that DirecTV pays OAN is confidential but crucial to OAN’s survival, Reuters wrote, citing court testimony from OAN’s accountant. “In addition to testifying that AT&T provided 90 percent of Herring Networks’ income, the accountant said the company’s book value—the net value of its assets—was a modest $16.6 million,” according to Reuters. The news article also quotes the accountant as testifying that, without the DirecTV deal, OAN’s value “would be zero.”

https://arstechnica.com/?p=1801788