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U.S. demands CNN or DirecTV sale to approve AT&T/Time Warner deal - sources

Reuters  |  NEW YORK/WASHINGTON 

By Jessica Toonkel and David Shepardson

NEW YORK/(Reuters) - U.S. antitrust regulators want AT&T Inc to sell either the parent company of CNN or its DirecTV satellite television unit before they will allow the wireless carrier to buy media company Inc , sources told on Wednesday.

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 closed down 6.5 percent at $88.54.

Justice Department source told 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 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, frequent critic of 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 lawsuit as early as this month to challenge the deal, sources familiar with the negotiations told

AT&T wants to buy Warner, which owns the premium channel HBO, movie studio Bros and 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 and Amazon.com Inc's Prime Video.

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 Warner, since giving an interview in 2016 where he declared it not "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 that the U.S. government wants to impose conditions on what AT&T can and cannot do after deal. Two people briefed on the talks told the government has sought as long as 10 years for such conditions while AT&T has pressed for 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.

(Reporting by David Shepardson and Diane Bartz in Washington, Greg Roumeliotis, Jessica Toonkel and Anjali Athavaley in New York, and Arjun Panchadar in Bengaluru; Editing by Patrick Graham and Bill Rigby)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, November 09 2017. 03:13 IST
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