Dallas-based AT&T calls hiring of Michael Cohen a "big mistake"

The head of Dallas-based AT&T is doing damage control on a scandal involving President Donald Trump's personal attorney, porn star Stormy Daniels and the Russia investigation.

AT&T is saying that the hiring of Trump's personal lawyer Michael Cohen was a "big mistake."

The company says Cohen approached them following the 2016 election. AT&T then hired him as a political consultant in 2017 and paid him $50,000 a month for a total of $600,000 for the year. The consulting fee went through a shell company Cohen also used to pay hush money to Daniels over her alleged affair with Trump.

Cohen's business dealings, including connections between the shell company and a Russian oligarch, are now under federal investigation.

In an internal memo to employees, CEO Randall Stephenson called the hiring a "serious misjudgment,'" and said that the company's chief lobbyist in Washington is leaving.

"Our company has been in the headlines for all the wrong reasons...and our reputation has been damaged," the memo said. "There is no other way to say it - AT&T hiring Michael Cohen as a political consultant was a big mistake."

Crisis communications pro Merrie Spaeth explains the corporation was trying to make insider connections with the new president by hiring Cohen.

"My bet is that they're stumbling around trying to figure out how do we really understand this guy? How do we meet his management team at least to get an idea of how they think about things? That was smart," Spaeth said. "They went about it in the wrong way. They're paying a price, but they're doing the right thing."

AT&T maintains that Cohen did no lobbying but was paid for his insight into the administration. One of the company's big issues is its $85 billion buy of Time Warner, which it desperately wants to go through. A federal judge is expected to rule on the proposed buy in the next couple of months. It would be one of the biggest media deals ever if approved.

AT&T was visited by the special investigator Robert Mueller's team six months ago to ask questions about Cohen, but it did not reveal its relationship until it was revealed for them by Daniels' attorney, Micheal Avenetti.

SMU Economics Professor Bud Weinstein points to the awful timing for AT&T.

"If the decision goes against AT&T, if this merger is blocked, then we may see some other heads roll at AT&T… including the chairman," he said.

Company sources tell FOX Business Network that Stephenson is on thin ice with the company's board and that he could be on the way out if the merger fails following the mishap with Cohen. His critics on the board also point to his failed attempt to purchase T-Mobile in 2011 and his $49 billion acquisition of Direct TV. It's a sum that analysts say has not been worth the money so far.

"Companies paying people who have a grasp on the president's thinking is nothing new," Weinstein said.

In fact, AT&T says it's done exactly that with previous administrations too. But Weinstein says the judgement used to hire Cohen, of all people, is bad optics for the company.

"What's unfortunate is the company and the individual who was retained because Michael Cohen is in trouble," Cohen said.

The internal memo also said that Senior Executive Vice President Bob Quinn "will be retiring." He oversaw the contract with Cohen.