Published: Thu, November 09, 2017
Markets | By Noel Gibbs

DOJ demanding CNN sale to approve AT&T/Time Warner — FT

DOJ demanding CNN sale to approve AT&T/Time Warner — FT

According to a Financial Times source with knowledge of the discussions, Time Warner is being asked to divest itself of CNN, one of two major demands, which the source told the Financial Times were "completely unreasonable" and "a complete perversion of the guidelines of the law". According to a DOJ source, the companies made an offer to put CNN up for sale in order to get the deal done. I can't comment on those discussions.

An afternoon recap of the day's most important business news, delivered weekdays. "Throughout this process, I have never offered to sell CNN and have no intention of doing so".

The justice department did not immediately comment on the matter.

Earlier this year, lawmakers including Senator Amy Klobuchar, a Democrat from Minnesota, said the deal raises antitrust concerns.

AT&T announced its acquisition of Time Warner more than a year ago. The Justice Department's late-stage requirements for the merger seemed to confirm people's fears. But AT&T has said it doesn't want to lose the all-news network in the deal.

But on Wednesday, AT&T chief financial officer John Stephens said at an investor conference that there is now "uncertainty" about when the deal will close. The New York Times added a later report that said AT&T could also sell satellite TV distributor DirecTV, which might satiate government regulators.

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"Threatening Turner is a fig leaf for threatening CNN", one of the sources said.

Being forced to sell off Turner is probably a "nonstarter" for AT&T, New Street Research analyst Jonathan Chaplin said.

As for DirecTV, "it's a false choice", one of the sources said, saying that the offer seemed created to disguise an attempt to punish CNN.

The Justice Department's hardline approach to AT&T - belying the business-friendly image of the Trump administration - has spurred questions about Trump's personal interest in the deal.

From the campaign trail, Trump criticized the deal, saying that he would reject it because it concentrated media power. CNN is a major force in USA news, a very profitable company, and a favorite target of President Donald Trump. Turner Broadcasting is the parent company of the CNN cable network, which has been a frequent target of criticism from president Donald Trump.

Is the Justice Dept.'s move a pure political play?

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The Journal story was an unwelcome surprise for AT&T executives.

In 2011, the Obama administration approved Comcast's acquisition of NBC Universal. Without an agreement, the Justice Department would sue to block the merger - as soon as next week, one of the people said. "With regards to the transaction, everything continues as we've expressed in the past".

It's not clear what DOJ statement Stephenson was referring to. It would then supply its video - HBO, CNN, TBS and the Warner Bros. movie studio - while providing access to the internet for millions of Americans.

United States regulators have reportedly told AT&T it must sell the CNN news channel for its $84.5bn (£65bn) acquisition of Time Warner to go ahead.

Separately, Mr. Trump has criticized the proposed merger from a populist perspective.

Time Warner's stock dropped as much as 6.6% on the news, while AT&T climbed 0.4%.

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