AT&T Inc’s pending acquisition of Time Warner Inc, an US$85 billion media deal that could shake up how Americans watch TV, is being held up by the government.
That is raising red flags for some who worry that the White House is trying to put pressure on CNN, the news network owned by Time Warner.
The US Department of Justice told AT&T that it wanted the telecom company to sell its DirecTV satellite unit or Time Warner’s Turner, which houses CNN, TBS and TNT, to get the deal approved, said a person familiar with the situation, who was not authorized to speak publicly.
According to a department official, AT&T has offered to divest CNN.
The official, who was not authorized to discuss the matter publicly, said the department rejected that offer as insufficient to resolve its concerns, which it did not specify.
AT&T CEO Randall Stephenson said in a statement: “I have never offered to sell CNN and have no intention of doing so.”
An AT&T spokesman did not respond to other questions, although one company executive on Wednesday told an investors’ conference that timing of the deal is “uncertain.”
The deal’s holdup has raised suspicions of political retaliation — even from people who oppose the deal entirely.
As a US presidential candidate, Donald Trump vowed to block the deal because it concentrated too much “power in the hands of too few.”
As president, Trump has often blasted CNN for its coverage of him and his administration, disparaging it and its reporters as “fake news.”
“While there are plenty of good reasons to oppose AT&T’s Time Warner takeover, punishing CNN for trying to hold this administration accountable isn’t one of them,” Free Press president Craig Aaron said in a statement.
The consumer group opposes the deal and media consolidation in general.
Time Warner shares dropped 6.5 percent to US$88.50 on Wednesday.
AT&T stock closed up 1.1 percent at $33.44.
If AT&T and the department cannot agree to conditions, the government can sue to block the deal.
The department official said no decision on the deal has been reached yet and that conversations continue.
AT&T had previously targeted the end of the year for closing the deal, and Wall Street analysts had widely expected the deal to go through.
Regulators in 2011 approved a similar media merger, cable company Comcast Corp’s purchase of NBCUniversal, after Comcast agreed to a slew of business requirements.
The department’s new antitrust chief, Makan Delrahim, has said he prefers “structural” changes to a deal, like selling off assets, rather than having the government monitor a company’s promises to abide by certain conditions, as was done with Comcast.
Requiring AT&T to sell either Turner or DirecTV would be in line with Delrahim’s thinking.
In an e-mailed statement, the department said that it “is committed to carrying out its duties in accordance with the laws and the facts. Beyond that, the department does not comment on any pending investigation.”
Forcing a sale of CNN could harm the news network, if a buyer does not have the same deep pockets as AT&T and Time Warner to support news gathering.
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