AT&T had a rough week. On Wednesday, Reuters published a special investigative report that says 90% of right-wing propaganda TV network OAN’s revenue came from a carriage contract with AT&T-owned or controlled television platforms, including satellite broadcaster DirecTV, according to 2020 sworn testimony by an OAN accountant.
The Reuters investigation found that the world’s largest communications company—owner of WarnerMedia, HBO, CNN, and DirecTV—also played a crucial role in creating OAN, which continues to spread conspiracy theories about the 2020 election and the COVID-19 pandemic. OAN founder and chief executive Robert Herring Sr testified in court documents seen by Reuters that the inspiration to launch OAN in 2013 came from AT&T executives. Herring said, “They told us they wanted a conservative network. They only had one, which was Fox News, and they had seven others on the other [left wing] side. When they said that, I jumped to it and built one.” The bulk of OAN’s funding appears to come from subscriber fees for ATT-Owned DirecTV. Herring has testified he was offered $250 million for OAN in 2019, and a network accountant said under oath that without the DirecTV deal, the network’s value “would be zero.”
AT&T has responded to the report denying it funds OAN tweeting, “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 with other TV providers that carry its programming.”
DirecTV is a separate company, but one that is still 70% owned by AT&T, which sold off 30% in August to private equity firm TPG. Whether DirecTV is a subsidiary of AT&T or just majority-owned by the telecom giant, this story’s reflection on AT&T’s brand image remain the same. And it’s not good. For a company that owns liberal-leaning CNN, and requires vaccine and mask mandates for its own employees, to be associated with the conspiracy theories and misinformation of OAN, could to some have the appearance of brand hypocrisy.
Congressional Black Caucus Chairwoman Joyce Beatty, a Democratic representative from Ohio, said in a statement, “AT&T’s support of OAN is in direct opposition to its claims of embracing and valuing diversity, equity, and inclusion.”
NAACP President Derrick Johnson also put out a statement, saying that through its association with OAN, AT&T has done irreparable damage to American democracy. “AT&T’s values could not be any more performative and flat-out fake. We are sickened by these revelations,” said Johnson.
“We are outraged to learn that AT&T has been funneling tens of millions of dollars into OAN since the network's inception. AT&T has as a result caused irreparable damage to our democracy.” – @DerrickNAACP https://t.co/AQjeAGmnzN
— NAACP (@NAACP) October 6, 2021
With all of this trouble, AT&T might be glad they are getting out of the media game. The company is in the process of merging WarnerMedia’s media properties with Discovery Inc. to form a new stand-alone company called Warner Bros. Discovery. The deal is expected to close by mid-2022.
Still, brand and marketing executives I spoke to, under condition of anonymity, said that this close connection to the founding and funding of OAN will undoubtedly impact the AT&T brand, both with everyday customers and corporate partners. “There could be some real brand damage,” said one exec. “If the last 18 months has taught us anything it is we’ve officially left the era of shareholder capitalism and into the era of stakeholder capitalism now. It was a huge underestimation of the public that they thought they could fund OAN and not be accountable for that content. Modern consumers hold brands accountable for everything.”
Aside from its own direct brand image, the brand marketing execs see this also having blowback across AT&T’s owned properties like WarnerMedia, HBO, CNN, as well as major sponsorship partners like the NBA, WNBA, and NFL. Just as Major League Baseball pulled its 2021 All-Star game from Atlanta after Georgia passed new restrictive voting laws, AT&T partners won’t want to have even a whiff of a connection to OAN. “You better believe that there are a lot of people right now in war rooms with lawyers right now analyzing all of the exit clauses in contracts to see if AT&T is in violation of it,” said one exec.
While there has been plenty of media attention on the Reuters report, there have been no broad consumer calls for a company boycott. AT&T and its partners could simply ride out the charging pace of the ever-churning news cycle. Facebook has been publicly linked to divisive content, health misinformation and radicalization, not to mention links to teen depression, and its stock is still sailing along fine. Still, that doesn’t preclude no impact at all on the brand.
Another marketing exec speculated the bulk of brand damage will be internal, with leaders within CNN, HBO, and WarnerMedia wondering why they’re now associated with OAN in any way, and how that may impact their ability to attract and retain talent. In that way, it could just expedite AT&T’s desire to sell the other 70% of its DirecTV business. “That bundle (DirecTV, AT&T TV, and U-verse video services) is worth $16 billion, which is peanuts next to the $100 billion they want their overall content business to be worth,” said the exec. “Why take that risk?”