CNN or DirecTV must be sold to allow mega-merger, U.S. rules
NEW YORK • The U. S. Justice Department has called on AT&T and Time Warner to sell Turner Broadcasting, the group of cable channels that includes CNN, as a potential requirement for approving the companies’ pending US$ 85.4 billion deal, people briefed on the matter said on Wednesday.
The other potential way the merger could win approval would be for AT&T to sell its DirecTV division, two of these people added.
The demands set up a potential battle over the fate of the long- in- the- works deal that would create a new colossus straddling the worlds of media and telecommunications at a time when upstarts like Netflix are disrupting traditional players in both industries.
As originally envisioned, combining AT&T and Time Warner would yield a giant company offering wireless and broadband internet service, DirecTV, the Warner Bros. movie studio and cable channels like HBO and CNN.
If the Justice Department formally makes either demand a requisite for approval, AT&T and Time Warner would almost certainly take the matter to court to challenge the government’s legal basis for blocking their deal.
President Donald Trump has long accused the news network of harbouring a bias against him.
Separately, Trump has criticized the proposed merger from a populist perspective. In the final weeks of the presidential campaign, he argued that “deals like this destroy democracy” and cited it as the “an example of the power structure” that he was fighting.
While critics of the merger have described it as a sign that there is too much consolidation within the media and telecommunications industries, analysts have said that there were few legal grounds on which to block the transaction.
At an i nvestor conference on Wednesday, John Stephens, AT&T’s chief financial officer, said that the timing of the deal’s closing, which had been scheduled by year’s end, was now uncertain. The only remaining issue to be resolved, he added, was approval by the Justice Department.
“We are in active discussions with the DOJ,” Stephens said. “I cannot comment on those discussions. But with those discussions, I can now say that the timing of the closing of the deal is now uncertain.”
Executives at both AT&T and Time Warner have privately expressed bewilder- ment about the request from the Justice Department. Because the proposed deal is a “vertical” merger — meaning that neither company competes directly against the other — they believe there is little legal basis to block it.
To win approval for the deal, AT& T hired l obbyists close to Vice President Mike Pence and others in the Trump administration. AT&T was among the top donors to Trump’s inauguration.
AT& T’s chief executive, Randall Stephenson, had at least two meetings with Trump this year. Shortly after the first one, Trump lashed out at CNN on Twitter, saying “their credibility will soon be gone!” After the second meeting, which was focused on emerging technologies, the president said that Stephenson was doing “really a top job.”
Spokesmen for AT&T and Time Warner declined to comment.
A Justice Department representative declined to comment.