U.S. antitrust regulators and AT&T Inc sparred on Wednesday over whether the wireless carrier would be required to sell Time Warner Inc`s CNN cable network as a condition of approval of its deal to buy the media company.
The U.S. Department of Justice has demanded significant asset sales in order to approve the $85.4 billion deal, sources told Reuters on Wednesday, and asked AT&T to sell CNN-parent Turner Broadcasting or its DirecTV satellite TV operation in discussions on Monday.
AT&T offered to sell CNN, the sources said. AT&T denied that version of events of the meeting with Justice Department officials.
"I have never offered to sell CNN and have no intention of doing so," AT&T Chief Executive Randall Stephenson, said in a statement on Wednesday. Stephenson is set to appear at an event in New York City on Thursday and will likely face questions about the deal.
Reports that the Justice Department is pushing for significant asset sales and conflicting reports of its discussions with AT&T cast new doubt on the deal on Wednesday. Shares of Time Warner closed down 6.5 percent at $88.50.
The dispute is the latest twist in a deal which took on broader political significance immediately after its inception in October 2016. U.S. President Donald Trump, a frequent critic of CNN, attacked the deal on the campaign trail last year, vowing that as president his Justice Department would block it. He has not commented on the transaction since taking office in January.
The White House declined comment.
AT&T wants to buy Time Warner, which owns the premium channel HBO and movie studio Warner Bros along with Turner Broadcasting, so it can bundle mobile service with video entertainment and take online advertising from Facebook Inc and Alphabet Inc.
Both companies have struggled to keep younger viewers from flocking to online services like Netflix Inc and Amazon.com Inc`s Prime Video.CHANGE OF COURSE
Until recently the vertical deal - which in theory should not reduce competition among the two companies` direct rivals - was considered by antitrust experts as likely to be approved with no major concessions.
But regulators` desire for asset sales will complicate negotiations. AT&T said earlier on Wednesday it was now uncertain when the deal would be completed. It had previously said the acquisition would close by the end of this year.
The discussion of a potential sale of CNN has politicized the situation. Trump has repeatedly tangled with CNN, calling the network`s coverage "fake news."
Senator Al Franken, a Minnesota Democrat, said on Wednesday he opposed the mega-merger but was also worried about political implications of any divestiture of CNN.
"I am deeply concerned with the notion that the Justice Department may be pressuring the companies to consider spinning off CNN’s parent company Turner Broadcasting as a path forward toward approval of the acquisition, given the president’s repeated public complaints about CNN’s coverage of him," Franken said. "Any indication that this administration is using its power to weaken media organizations it doesn’t like would be a profoundly disturbing development."
On Sunday, White House adviser Kellyanne Conway told CNN that the White House would not interfere with the merger review.
There are many ways to resolve concerns about the deal, a Justice official said on Wednesday, adding that no decision had been made and that conversations with AT&T were continuing.
AT&T is prepared to fight any divestitures required to win regulatory approval of the deal, according to sources familiar with the matter.
The Justice Department could file a lawsuit as early as this month to challenge the deal, sources familiar with the negotiations told Reuters. TOO MUCH POWER
The deal is opposed by an array of consumer groups and smaller television networks on the grounds that it would give AT&T too much power over the content it would distribute to its wireless customers.
The new concessions suggest the head of the Justice Department`s antitrust division, Makan Delrahim, has changed his view of AT&T`s plan to buy Time Warner, since giving an interview in 2016 where he declared it not "a major antitrust problem."
Delrahim was subsequently nominated by U.S. President Donald Trump to head the Justice Department`s antitrust division and was confirmed in September. A further sticking point in discussions is the length of time that the U.S. government wants to impose conditions on what AT&T can and cannot do after a deal. 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 also said it would invest an additional $1 billion in the United States next year if Trump signed into law the provisions in the current House of Representatives tax bill.
"By immediately lowering the corporate tax rate to 20 percent, this bill will stimulate investment, job creation and economic growth in the United States," said Randall Stephenson, AT&T chief executive.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)