DOJ Demands CNN Sale to Approve AT&T-Time Warner Deal

DOJ Demands CNN Sale to Approve AT&T-Time Warner Deal

DOJ Demands CNN Sale to Approve AT&T-Time Warner Deal

The Justice Department brought up the idea of divesting either DirecTV, the satellite provider, or Turner Broadcasting, which includes CNN, TNT and TBS, one of the people said.

The demand would be unusual but not unprecedented.

Unidentified sources told media outlets the Justice Department is pushing AT&T to offload certain assets for sale for the deal to be approved. "If the Justice Department formally makes either demand a requisite for approval, AT&T and Time Warner would nearly certainly take the matter to court to challenge the government's legal basis for blocking their deal", The New York Times wrote. In July, advocates said in a letter to DOJ that AT&T could potentially discriminate against rivals while favoring its own over-the-top video services, by using strategies like excluding its video from consumers' data caps, or prioritizing streams of its video.

The companies had been planning to finalize the deal by the end of the year, and just last week AT&T said it was confident it would win approval for the deal since it does not involve direct competitors.

"We are in active discussions with the DOJ [Department of Justice]", Stephens said.

AT&T offered to sell CNN, the sources said. "But given the DOJ's statement this afternoon, it's important to set the record straight".

Time Warner shares have dropped 6% to $88.91, while AT&T's have managed a almost 1% gain, to $33.33.

President Donald Trump has made frequent critical comments about CNN and its CEO Jeff Zucker, regularly calling CNN "fake news". Thus far, the only grounds for the DOJ requirements seems to be the sheer scale of the proposed combination and the amount of real estate the new company would occupy in the media business, with vast distribution married to a deep well of content. But, the president's oft-stated animus toward CNN and its reporting could also be seen as an obstacle to the deal's completion should the Trump administration's Justice Department ultimately opt to challenge the acquisition.

AT&T opposes the sale and plans on taking the Trump administration to court, the newspaper reported. Two people briefed on the talks told Reuters the government has sought as long as 10 years for such conditions while AT&T has pressed for a shorter period. AT&T shares were up 1.1 percent to $33.44. The New York Times explains that these "behavioral remedies" are typical in vertical mergers, but "t$3 he Justice Department's demands for divestitures would be a major change in antitrust policy".

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