Update 2: The plot thickens. As The Hill reports, AT&T and Time Warner offered to divest CNN, however the DOJ Antitrust Division flatly rejected the proposal, Justice Department sources said. But AT&T CEO Randall Stephenson said in a statement Wednesday afternoon that he was not entertaining the idea of selling CNN from the combined company:
“Until now, we’ve never commented on our discussions with the DOJ," Stephenson said. "But given DOJ’s statement this afternoon, it’s important to set the record straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so.”
NEW: The Justice Dept claims that AT&T privately offered to sell CNN. AT&T CEO Randall Stephenson DENIES that: "Throughout this process, I have never offered to sell CNN and have no intention of doing so."— Brian Stelter (@brianstelter) November 8, 2017
Earlier Bloomberg also reported that AT&T offered to sell CNN (which was rejected by the government), while another person said the Justice Department brought up the idea of divesting either DirecTV, the satellite provider, or Turner Broadcasting, which includes CNN, TNT and TBS.
As Bloomberg notes, the conflicting views highlight just how far apart the two sides are in getting a deal done and the risk that talks could hit an impasse. Without an agreement, the Justice Department would sue to block the merger, as soon as next week, one Bloomberg source said. 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.
Bloomberg aldo adds that it’s not clear if AT&T would be willing to part with anything it’s acquiring from Time Warner. The company has said it considers CNN, the news network that has been a lightning rod for President Donald Trump, a prize asset, and the company also considers properties such as the Warner Bros. studio, HBO, TNT and TBS essential, people familiar with the matter said.
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Update: Fox News is reporting that CBS has expressed some interest in buying CNN.
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After the DOJ's antitrust division let it be known that it was preparing to file an antitrust lawsuit to block the AT&T-Time Warner merger, something that President Donald Trump famously insinuated might happen during the campaign, it appears a week of rushed negotiations with the DOJ and the two companies has yielded a compromise.
And unsurprisingly, the DOJ is requesting that Time Warner sell CNN - the network that Trump has repeatedly bashed and labeled as "fake news" - as part of a deal that would allow the merger to move forward, the Financial Times reported. However, that isn't the only condition; the DOJ is apparently taking a hard line with the merger, in accordance with Trump's publicly expressed wishes.
AT&T has been told by the US Department of Justice that it needs to sell CNN, Time Warner’s cable news channel, to get its $84.5bn acquisition of the media company approved, according to three people with direct knowledge of the negotiations.
The sale of CNN, which President Donald Trump has fiercely criticised as “fake news”, is just one of the demands being made by the US antitrust authority in order to sign off on the deal, those involved in the talks said. But it could prove a stumbling block.
AT&T is opposed to selling the TV network and is preparing to take the Trump administration to court, arguing the deal with Time Warner does not pose any competition violations.
“It’s all about CNN,” said one person with direct knowledge of the talks between the company and the DOJ, adding that the regulator made it clear to AT&T that if it sold CNN the deal would go through.
As recently as a week ago, the two companies said they still expected the merger to close despite reports of DOJ's opposition. Their expected timeline had the deal closing by year-end. But John Stephens, AT&T's chief financial officer, told a New York investor conference on Wednsday that "the closing of the deal is now uncertain," which sent Time Warner shares tumbled and AT&T shares moving higher. Similars moves played out Wednesday after news about the deal's conditions broke.
Trump isn't the only one who's raised his hackles about the deal. Consumer groups, wary of the consolidation of content creators and distribution networks, had advocated that Time Warner spin off CNN. One CNBC commentator speculated that selling CNN wouldn't be a problem for AT&T because it's not the core asset that the mobile provider wanted out of the deal.
The conditions represent a change of heart fo Makan Delrahim, the new head of the justice department’s antitrust division, who has been more conciliatory, saying before taking office that he did not believe the merger posed a “major antitrust problem”.
“The sheer size of it, and the fact that it’s media, I think will get a lot of attention,” Mr Delrahim told a Canadian TV station in 2016 after the AT&T deal with Time Warner was announced. “However, I don’t see this as a major antitrust problem."
People with direct knowledge of the antitrust negotiations confirmed to the FT that Delrahim had changed his view since taking office. The deal was originally set to expire last month but AT&T last week extended its termination deadline “for a short period” while it waited for approval from US regulators.