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The Justice Department Wants AT&T To Sell Something In Order To Approve Time Warner Deal

The commissioner of the FCC said forcing the sale of CNN "because the president doesn't like its news coverage" is "extremely disturbing if true."

Originally posted on
Updated on

The Justice Department is seeking major concessions before approving one of the biggest media deals in history — AT&T’s acquisition of Time Warner — according to people familiar with the matter.

DOJ has called for AT&T and Time Warner to either sell Turner Broadcasting — the group of cable networks that includes TBS, TNT, and CNN — or to offload its DirecTV unit, according to one of the people familiar. At a meeting on Monday, the DOJ told AT&T executives that either Turner or DirecTV had to go, which AT&T executives said was a nonstarter, this person said.

Some executives at the companies are viewing the stipulation as a political barb aimed directly at CNN, which President Donald Trump has frequently demonized as “fake news.”

“The pro-business, pro-commerce Republican administration objects to a vertical integration with 40 years of legal precedent,” said one executive familiar with the negotiations.

Reports on Wednesday also said that AT&T CEO Randall Stephenson had offered to sell CNN, which the executive has denied. Speaking at a Dealbook conference on Thursday, Stephenson said that he had “never been told that the price of getting a deal done was selling CNN.” He added that “there is no intention that we would ever sell CNN.”

“It’s a big deal to suggest that I walked in there and volunteered to sell a really important asset to get the deal done,” Stephenson said. “To have somebody come out to say we’re offering up to sell CNN to get a deal done, it’s a painful situation that needs to be addressed.”

Wait, are we really going to make the @TheJusticeDept use antitrust law to force the sale of a cable channel becaus… https://t.co/qgt1BtBzH6

The Financial Times first reported that regulators were demanding a CNN sale. The New York Times reported that DOJ was calling on the merging companies to divest all of Turner — or potentially have AT&T sell DirecTV. Bloomberg reported that AT&T is preparing to fight the concessions in court.

“The Department is committed to carrying out its duties in accordance with the laws and the facts," a DOJ spokesperson said in a statement. "Beyond that, the Department does not comment on any pending investigation.”

The idea that the deal — originally considered to not pose much of an antitrust concern — could be influenced by politics has raised concern in media and government circles.

Jessica Rosenworcel, the commissioner of the FCC, said the notion that the Justice Department would force the sale of CNN "because the president doesn't like its news coverage" is "extremely disturbing if true."

Last year, AT&T and Time Warner set a target for closing the deal by October 2017. In October, the companies said that the merger was in the final stages of review with DOJ. 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.

As the president has escalated his vocal war with CNN, reporters and executives at the news organization have wondered openly whether Trump will seek to use the deal as leverage over the network.

From the campaign trail, Trump criticized the deal, saying that he would reject it because it concentrated media power. But after the Wall Street Journal reported last week that the DOJ was weighing a suit against the merger, Kellyanne Conway told CNN’s Brian Stelter that “we’re not going to interfere with that here.”

In an interview last year, Makan Delrahim — now the newly appointed head of DOJ’s antitrust unit — said that the merger did not pose an antitrust issue. The deal was believed to face less scrutiny than other colossal media deals because it is a so-called “vertical merger,” meaning that the two entities do not compete with each other. But according to the FT, Delrahim had “changed his view since taking office” regarding the antitrust problems posed.

If approved, the deal would merge AT&T’s wireless and broadband business with media assets like Warner Bros., HBO, and Turner’s cable networks.

This story has been updated with more information about the negotiations. Matthew Zeitlin contributed reporting.

Steven Perlberg is a media and politics reporter for BuzzFeed News and is based in New York. His PGP fingerprint is 0ACB FA3B AC49 D43C 79C4 8DE5 3C06 7521 F4EC 3AA5

Contact Steven Perlberg at steven.perlberg@buzzfeed.com.

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