U.S. antitrust regulators want AT&T Inc
The unexpected move by the U.S. Department of Justice casts fresh doubt on the $85.4 billion deal that was announced in October 2016. Shares of Time Warner closed down 6.5 percent at $88.54.
A Justice Department source told Reuters that AT&T had offered to divest just CNN, rather than the whole of Turner Broadcasting, but that the Justice Department`s antitrust division, which is reviewing the deal, rejected the offer.
In a statement, AT&T Chief Executive Randall Stephenson denied that. "Throughout this process, I have never offered to sell CNN and have no intention of doing so."
AT&T is prepared to fight any divestitures required to win regulatory approval of the deal, according to sources familiar with the matter.
The deal has attracted political interest since its inception. U.S. President Donald Trump, a frequent critic of Time Warner`s CNN, attacked the deal on the campaign trail last year, vowing that as president his Justice Department would block it.
The Justice Department`s new demand is likely to complicate its continuing antitrust conversations with AT&T, which said on Wednesday it was now uncertain when the deal, announced in October 2016, would be completed. AT&T had previously said the acquisition would close by the end of this year.
The Justice Department could still file a lawsuit as early as this month to challenge the deal, sources familiar with the negotiations told Reuters.
AT&T wants to buy Time Warner, which owns the premium channel HBO, movie studio Warner Bros and news channel CNN, so it can bundle mobile service with video entertainment. Both companies have struggled to keep younger viewers from flocking to online services like Netflix Inc
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. The Justice Department did not immediately respond to requests for comment on the matter. AT&T and the White House declined comment.
Another 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.)