Feds, AT&T in talks over Time Warner acquisition

AT&T and the U.S. Department of Justice are discussing conditions the No. 2 wireless carrier needs to meet to win government antitrust approval for its acquisition of Time Warner, sources familiar with the situation said Thursday.

The $85.4 billion deal, unveiled in October 2016, is opposed by of consumer groups and competitors on the grounds that it would give the wireless company too much power over the media it would carry on its own network.

Wall Street largely thinks the transaction will go through, but its success is not assured, and the issue has become a political battleground.

Donald Trump, who has accused Time Warner’s CNN and other media of being unfair to him, criticized the deal on the campaign trail last year and vowed that as president his Justice Department would block it. As president, he has not revisited the subject.

Approval of the deal marks an early challenge for Trump’s appointee as the Justice Department’s antitrust chief, Makan Delrahim, who was confirmed by Congress in late September. Delrahim said at his confirmation hearing in May that he would not discuss antitrust matters with the White House.

Delrahim, perhaps looking to make a mark in his new job, might want to ramp up pressure on AT&T. The Wall Street Journal reported Thursday that the Justice Department was laying the groundwork for a potential lawsuit aimed at stopping the deal if settlement talks did not work out.

The Journal reported that the outcome could go either way. It did not say what the sticking points were. The Justice Department did not reply to requests for comment.

AT&T has said it expected the deal to close by the end of the year. AT&T executives have expressed confidence that it would reach an agreement with the antitrust enforcer.

“When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios,” AT&T said in a statement Thursday.

“For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market,” AT&T said.

Arguments over the deal have focused on how much power a pay-TV provider should have in steering its customers to cable channels that it also owns. Critics from both parties argue that AT&T’s purchase of Time Warner would give it the clout to steer customers to its own premium content.

Time Warner properties include CNN, HBO, the film studio Warner Bros and other media assets.

Trump has not repeated his criticism of the deal since becoming president, and he has met with AT&T Chief Executive Randall Stephenson at least twice in 2017.

Daphna Ziman, the founder and president of Cinémoi, a female-owned TV network, said last month she had met with the Justice Department to discuss the merger. She told a U.S. Senate panel that “further consolidation could be catastrophic to diverse, minority and women-owned voices.”

The Justice Department has been discussing whether to require conditions that AT&T does not discriminate against channels that compete with Time Warner and unfairly advantage its own channels, time limits on any such conditions and customer data issues, sources said.