AT&T ready for le­gal fight

CEO says tele­com giant is pre­pared to lit­i­gate with U.S. over Time Warner deal.

Los Angeles Times - - BUSINESS BEAT - By David Ng­ Times staff writer Meg James con­trib­uted to this re­port.

AT&T is gear­ing up for a po­ten­tial le­gal bat­tle with the gov­ern­ment over the com­pany’s planned takeover of Time Warner, said Ran­dall Stephen­son, chief ex­ec­u­tive of the telecom­mu­ni­ca­tions giant.

Stephen­son, speak­ing at the New York Times’ Deal­Book Con­fer­ence in New York City on Thurs­day, also said AT&T has no in­ten­tion of sell­ing CNN as part of the mega-deal. His com­ments came just one day af­ter news broke that the U.S. Jus­tice Depart­ment is pres­sur­ing AT&T to sell CNN as a re­quire­ment for the pro­posed $85-bil­lion deal to re­ceive fed­eral ap­proval.

“Since the day we’ve an­nounced this, we’ve been pre­par­ing to lit­i­gate this deal, and we have been work­ing very dili­gently on a lit­i­ga­tion strat­egy and a lit­i­ga­tion plan,” Stephen­son said.

“If we get to a place, we’ll have to ask our­selves: Is a ne­go­ti­ated set­tle­ment a bet­ter or worse out­come than if we lit­i­gate? If we feel like lit­i­ga­tion is a bet­ter out­come, then we will lit­i­gate.”

On re­ports that the Jus­tice Depart­ment wants AT&T to di­vest Time Warner’s Turner Broad­cast­ing unit — which in­cludes CNN, Car­toon Net­work, TBS, TNT and Turner Clas­sic Movies — Stephen­son said: “I have never been told that the price of get­ting the deal done was sell­ing CNN. Pe­riod. And like­wise, I have never of­fered to sell CNN.

“I don’t even know who in the DOJ is say­ing these things. I have never of­fered to sell CNN.”

Stephen­son de­clined to elab­o­rate on AT&T’s dis­cus­sions with the gov­ern­ment. The com­pany is be­lieved to be fac­ing a choice of sell­ing Turner Broad­cast­ing or di­vest­ing its satel­lite tele­vi­sion unit, DirecTV. But such a choice most likely would un­der­mine the en­tire point of the deal, which was to com­bine con­tent, wire­less ser­vice and TV dis­tri­bu­tion.

“What gets dis­cussed in­side that room is highly priv­i­leged, and I can­not go there,” he said.

But Stephen­son de­fended the deal against its crit­ics, in­clud­ing Pres­i­dent Trump, who has pub­licly crit­i­cized CNN for its cov­er­age of his ad­min­is­tra­tion and has re­peat­edly called the net­work “fake news.”

“This is a clas­sic ver­ti­cal merger. There are no over­laps of com­pe­ti­tion; there are no com­peti­tors be­ing taken out of this mar­ket,” Stephen­son said.

The new road­block over CNN could sig­nif­i­cantly de­lay or even up­end AT&T’s planned takeover of Time Warner, which was first an­nounced last year and had been ex­pected to close by the end of this year.

On Wed­nes­day, AT&T Chief Fi­nan­cial Of­fi­cer John Stephens sur­prised in­vestors when he re­vealed that the com­pany was in talks with the Jus­tice Depart­ment and that “the tim­ing of the clos­ing of the deal is now un­cer­tain.”

AT&T and Time Warner now have an April 22 dead­line for their merger agree­ment to close.

The Jus­tice Depart­ment said in a state­ment Wed­nes­day that 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.”

David A. Gro­gan Getty Im­ages

AT&T CEO Ran­dall Stephen­son, shown in Jan­uary 2016, said the com­pany has no in­ten­tion of sell­ing CNN as part of its planned takeover of Time Warner.

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