U.S. Said to Seek Sale of CNN or DirecTV in AT&T-Time Warner Deal
The Justice Department has called on AT&T and Time Warner to sell Turner Broadcasting, the group of cable channels
that includes CNN, as a potential requirement for approving the companies’ pending $85.4 billion deal, people briefed on the matter said on Wednesday.
As originally envisioned, combining AT&T and Time Warner would yield a giant company offering wireless
and broadband internet service, DirecTV, the Warner Brothers movie studio and cable channels like HBO and CNN.
If the Justice Department formally makes either demand a requisite for approval, AT&T
and Time Warner would almost certainly take the matter to court to challenge the government’s legal basis for blocking the transaction.
The Justice Department would have to argue that AT&T would have an incentive to withhold Turner
channels like CNN or its NBA on TNT from rival broadband distributors like Verizon or Comcast.
But with those discussions, I can now say that the timing of the closing of the deal is now uncertain.”
Executives at both AT&T and Time Warner have privately expressed bewilderment about the request from the Justice Department.
The demands set up a potential battle over the fate of the long-in-the-works deal
that would create a colossus straddling the worlds of media and telecommunications at a time when upstarts like Netflix are disrupting traditional players in both industries.
Because the proposed deal is a “vertical” merger — meaning
that neither company competes directly against the other — they believe there is little legal basis to block it.