Last Updated Nov 8, 2017 4:28 PM EST
AT&T’s (T) blockbuster acquisition offer for media giant Time Warner (TWX) appears in danger of collapsing over antitrust concerns with the proposed $85.4 billion deal.
As a condition for approving the merger, the US Department of Justice is pushing the telecommunications and media giants to sell Turner Broadcasting, the Time Warner unit that includes CNN, CBS News correspondent Julianna Goldman reported, citing a person familiar with the matter.
The source confirms that this was conveyed to AT&T at a meeting on Monday with the head of the Justice Department’s antitrust division, Makan Delrahim, and that AT&T is prepared to take the administration to court.
AT&T CEO said Randall Stephenson said the company does not plan to divest CNN as part of any antitrust settlement.
“Until now, we’ve never commented on our discussions with the DOJ. But given DOJ’s statement this afternoon, it’s important to set the record straight,” he said in a statement. “Throughout this process, I have never offered to sell CNN and have no intention of doing so.”
That statement seems to leave open the possibility of AT&T selling other Turner brands, which include TBS, Cartoon Network, Turner Classic Movies and TNT.
A Justice Department spokesman said the agency “is committed to carrying out its duties in accordance with the laws and the facts,” while declining further comment because the agency doesn’t comment on pending investigations.
Doubts about the timing of the deal surfaced early Wednesday after an AT&T executive said the company is unsure when it will complete its acquisition of Time Warner.
Speaking at a New York technology conference, AT&T Chief Financial Officer John Stephens said the timing of the deal’s closure is “now uncertain.” Previously, AT&T had said in regulatory filings that it expected to finalize its purchase of Time Warner, which also owns Warner Bros. and HBO, among other media properties, by year-end.
“There are legitimate concerns that if this goes through — there will be some exclusion of programming,” said Herbert Hovenkamp, a professor of law at The University of Pennsylvania. “There is no question that it’s run into a roadblock.”
Yet he expressed surprised at the government’s focus on making the merged company divest CNN. “I don’t quite see how this relates to competition,” he said.
Time Warner couldn’t immediately be reached for comment.
Before his election in 2016, Donald Trump spoke out against the proposed AT&T-Time Warner union and said he would block it if he were elected president.
Mr. Trump and other White House officials have since made it clear to AT&T in multiple meetings that they are dissatisfied with CNN, Goldman reported. Sources tell CBS News that one of those instances occurred on Jan. 12 at Trump Tower when President-elect Trump raised the matter directly with Stephenson.
AT&T’s purchase of Time Warner, announced in October of 2016, would combine a leading wireless and internet service provider with the company behind some of the world’s most popular entertainment content, including “Game of Thrones” and the “Harry Potter” franchise. Because the two are not direct competitors, some antitrust experts thought the Justice Department was unlikely to block the deal.
Competitors and consumer groups have raised questions about the deal, arguing that it would give the wireless carrier too much control over the content carried on its network.
Shares of Time Warner fell 6.5 percent to close at $88.50. AT&T rose 1.1 percent to $33.44.
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