AT&T may need to jettison CNN to close Time Warner deal

CREDIT Richard Drew  AP  REX  Shutterstock

CREDIT Richard Drew AP REX Shutterstock

Senate Democrats have urged the Department of Justice to block AT&T's proposed acquisition of Time Warner, saying that "the combined company's unmatched control of popular content and the distribution of that content will lead to higher prices, fewer choices, and poorer quality services for Americans".

The US Department of Justice-the nation's antitrust authority-told AT&T it will not sign off on the deal unless the company sells the Time Warner-owned cable-TV news network, the Financial Times reported (paywall). The New York Times reported that DOJ was calling on the merging companies to divest all of Turner - or potentially have AT&T sell DirecTV.

As the controversy of the sell-off started to heat up, AT&T CEO Randall Stephenson defended his company against the DOJ allegations in a statement Wednesday, stating they were not behind the controversial idea.

The Justice Department has a different account. The agency is concerned that AT&T's ownership of Time Warner content could raise the costs of its pay-TV rivals, according to one of the people. Instead, AT&T would fight the DoJ ruling through the courts.

The demands thought to be being made of AT&T follow vocal opposition by President Donald Trump to the acquisition.

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The Justice Department said it's "committed to carrying out its duties in accordance with the laws and the facts", according to a statement.

Delrahim was subsequently nominated by U.S. President Donald Trump to head the Justice Department's antitrust division and was confirmed in September.

The new concessions suggest the Justice Department's antitrust chief Delrahim has changed his view of AT&T's plan to buy Time Warner, since giving an interview in 2016 where he declared it not "a major antitrust problem". That's raising red flags for some who worry that the White House is trying to put pressure on CNN, the news network owned by Time Warner. Last week, the Wall Street Journal reported that Trump's Justice Department was weighing a lawsuit challenging the deal. An AT&T spokesman did not respond to other questions, although one company executive told an investor conference Wednesday that timing of the deal is "uncertain".

Reports said the hold-up was, however, "all about CNN", citing sources.

Time Warner shares fell 6.5 percent to $88.50 at the close in NY, compared with the $107.50 offer price. This reporting prompted Democratic Senators to warn against political intervention. Two people briefed on the talks told Reuters the government has sought as long as 10 years for such conditions while AT&T has pressed for a shorter period.

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