DOJ told AT&T it has to sell CNN for Time Warner merger: report

by Mallory Shelbourne and Harper Neidig - 11/08/17 2:04 PM ET

The Justice Department has told AT&T and Time Warner to either sell off CNN’s parent company or DirecTV as a condition of approving their proposed merger, The New York Times reported Wednesday.

According to the report, the Justice Department wants Time Warner to sell off all of Turner Broadcasting, a subsidiary that holds CNN and other networks, like TBS and TNT. As an alternative, the regulators also proposed that AT&T sell DirecTV, which it bought in 2015 for $48.5 billion.

The Financial Times first reported that the Justice Department wants Time Warner to spin off CNN.

The parties offered to divest CNN and the DOJ Antitrust Division flatly rejected it, Justice Department sources told The Hill.

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But AT&T CEO Randall Stephenson said in a statement Wednesday afternoon that he was not entertaining the idea of selling CNN from the combined company.

“Until now, we’ve never commented on our discussions with the DOJ,” Stephenson said. “But given DOJ’s statement this afternoon, it’s important to set the record straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so.”

According to The New York Times, the Justice Department also proposed that AT&T sell off DirecTV as an alternative way to win approval for the deal.

The Wall Street Journal reported last week that the Justice Department was weighing a lawsuit to block the deal.

Some Democrats were quick to seize on the latest reports as evidence of political interference by the White House.

“Presidential power must be used wisely and fairly. I don’t know the details here but this is worth investigating,” Sen. Brian Schatz (D-Hawaii) wrote in a tweet.

“The burden of proof is on the Justice Department to establish that there is no political interference in their Antitrust Division,” he added.

Democrats will have a chance to grill Attorney General Jeff Sessions on the topic when he testifies before the House Judiciary Committee next week.

The news comes on the same day that one of AT&T’s top executives suggested that the deal has hit some roadblocks. The company has been saying for months that the merger is expected to close by the end of the year, but now John Stephens, AT&T’s chief financial officer, says that it’s unclear when the two companies will get the green light from regulators.

“I can’t comment on those discussions, but with those discussions, I can now say that the timing of the closing of the deal is now uncertain,” Stephens said at a conference in New York Tuesday, according to The Wall Street Journal.

Stephens emphasized that a “vertical merger like this hasn’t been blocked for over 40 years.”

On the campaign trail last year, President Trump had vowed to block the deal, but since he took office, most observers predicted that the $85 billion transaction would sail through the regulatory review.

Trump also has a long-running feud with CNN, a network he has repeatedly labeled “fake news.”

Still, there were few signs of trouble for the merger until July of this year, when The New York Times, citing an administration official, reported that the White House was exploring how to use the deal as leverage over CNN.

The report touched off criticism from Democrats, who are vehemently opposed to the deal but are wary of any White House interference in Justice Department proceedings.

“Although I have raised serious questions about the impact of AT&T’s proposed acquisition of Time Warner, Inc., the transaction should be judged solely on its impact on competition, innovation, and consumers, not as ‘leverage’ for political gain,” Sen. Amy Klobuchar (D-Minn.), the top antitrust Democrat, wrote in a letter to Attorney General Jeff Sessions over the summer.

Critics of the deal worry that AT&T’s control over programming would allow the combined company to give its own content favorable treatment, hurting competing networks. They also argue that the merger could lead to consumers paying higher prices for certain content.

In June, a group of Senate Democrats led by Sen. Al Franken (D-Minn.) wrote a letter to Attorney General Jeff Sessions criticizing the deal. In that letter, Democrats warned of potential problems of the merged company owning CNN and argued that no conditions would be sufficient to reduce the deal’s potential harm.

“Allowing one giant company like a combined AT&T-Time Warner to control the content available to Americans would threaten the basic principles of our democracy, especially given Time Warner’s ownership of key information sources like CNN,” the Democrats wrote.

“With both the incentive and the ability to direct consumers to Time Warner-owned content, AT&T-Time Warner could restrict its subscribers’ access to alternative viewpoints, such as those offered by competing news outlets like Fox, MSNBC, or Breitbart.”

– This story was updated at 3:52 p.m.

Tags Al Franken Amy Klobuchar AT&T Brian Schatz CNN Jeff Sessions Time Warner