CNN to be sold?
The fate of the cable news channel, oft criticized by President Trump, remains the most explosive element of a proposed media deal.
WASHINGTON — Justice Department officials told AT&T that its $85 billion bid to acquire Time Warner is unlikely to be approved without major changes, a move that is driving the two sides toward a high-stakes legal battle over one of the biggest media deals ever.
The deal would transform the telecom company into a media empire with control over CNN, HBO and Warner Bros. studios as well as satellite cable provider DirecTV. Antitrust officials want AT&T to either sell off DirecTV or Turner Broadcasting, which includes CNN — conditions that AT&T is unlikely to agree to easily.
But three people briefed
on the situation had conflicting accounts of the specifics.
One of the people said Wednesday that the Justice Department, at a meeting in Washington this week, pressed AT&T to divest CNN, which has been criticized repeatedly by President Donald Trump. But the other two denied that happened, adding that it was in fact AT&T that had proposed the sale of the news network as a potential compromise. The three people spoke on the condition of anonymity to freely talk about the private discussions.
Conflicting news reports about the role of CNN in the talks prompted AT&T’s chief executive, Randall Stephenson, to release a statement Wednesday afternoon, saying he has “never offered to sell CNN and have no intention of doing so.”
Antitrust regulators have been examining the AT&T-Time Warner deal for more than a year, and any notion that it would be easily approved evaporated Wednesday as reports about the Monday meeting leaked out.
Earlier Wednesday, AT&T’s chief financial officer said he is no longer confident that a deal will be completed this year.
The proposed tie-up is part of a push by cable and telephone companies to own the content that flows through their pipes. In 2011, Comcast, the nation’s largest cable provider, became the first to swing a massive deal of this kind when it acquired NBC Universal.
AT&T’s tie-up with Time Warner would give the telecom giant large control over a massive media ecosystem. The combined company could own HBO television shows, superhero films set in the DC Comics universe, including the forthcoming “Justice League,” and the Harry Potter franchise. It would also have a distribution network that includes AT&T’s wireless network, home Internet platform and DirecTV, which it purchased in 2015.
Some antitrust analysts said that the Department of Justice’s moves send a message that the federal government is looking skeptically at such megamergers.
“We may be on a collision course to litigation unless something changes,” said Gene Kimmelman, a former antitrust official and the president of Public Knowledge, a consumer group.
The case would be a high-profile test for Makan Delrahim, who was appointed by Trump to head the Justice Department’s antitrust division. Delrahim is regarded in Washington as a politically savvy antitrust expert and was a vocal supporter of Trump’s in 2016.
The legal battle would also be unusual because antitrust officials rarely challenge companies that are not buying direct competitors.
Dallas-based AT&T could argue in court that the administration is blocking the deal for political reasons. Trump has frequently accused CNN of biased coverage.
“A judge is likely to be a great deal more skeptical of DOJ’s arguments because of Trump’s obvious agenda,” said Berin Szoka, president of TechFreedom, a libertarian think tank. That might make it more likely that AT&T would refuse to settle, he added.
“The really interesting question is whether AT&T might convince the court to force DOJ to turn over internal correspondence with the White House over the issue, which might reveal clear evidence of politicization of the process,” Szoka said.
White House officials declined to comment.
A spokesman for the Department of Justice said it “is committed to carrying out its duties in accordance with the laws and the facts. Beyond that, the department does not comment on any pending investigation.”
Trump also said at a rally before his inauguration that the AT&T-Time Warner tie-up would be “too much concentration of power in the hands of too few.”
The jab at AT&T and Time Warner surprised policy analysts who said presidents and candidates for office generally avoid commenting on pending deals for fear of influencing — or appearing to influence — the process.
Democrats jumped on the news to accuse the administration of putting politics ahead of policy.
Jessica Rosenworcel, a Democratic commissioner on the Federal Communications Commission, tweeted Wednesday: “Wait, are we really going to make the TheJustice Dept use antitrust law to force the sale of a cable channel because the president doesn’t like its news coverage? You can dislike consolidation but still find this extremely disturbing if true.”