The Trump administration is threatening to scuttle AT&T’s $85.4bn takeover of Time Warner’s media assets unless the company sells off the parent unit of CNN or the satellite operator DirecTV, according to reports.
The DoJ requirement, first reported by the Financial Times, comes against a backdrop of intense criticism of CNN as “fake news” by Donald Trump on his Twitter account in the past year.
The timing of the deal, originally expected to close by the end of the year, is now uncertain, according to senior AT&T executives. News of the impasse has ignited speculation that Trump is punishing Time Warner for criticism of his administration.
“We are in active discussions with the DoJ [department of justice],” AT&T chief financial officer John Stephens said Wednesday. “Those are continuing on. 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.”
The deal dates back to October 2016, when both companies appeared confident that regulators would let the sale of Time Warner’s assets go through without objection under a then-likely first term Hillary Clinton administration.
During the campaign, Trump said in a speech that under a potential Republican White House, his administration would not approve the deal if he was elected.
“As an example of the power structure I’m fighting,” he said last October, “AT&T is buying Time Warner and thus CNN – a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.”
But AT&T chief Stephenson said the combined company would “give customers unmatched choice, quality, value and experiences that will define the future of media and communications”.
Executives described an almost limitless movie and television empire, including Harry Potter, Batman, Superman and the next generation of superhero movies being developed by DC Comics that could be distributed over AT&T’s wireless network, which is estimated to reach 315 million people.
But the dealmakers could not anticipate the regulatory environment ushered in by the Trump administration and antitrust division chief Makan Delrahim.
Delrahim, who was confirmed in September, comes from a corporate law background and previously represented tech giants like AT&T, Google and Qualcomm.
His confirmation was strongly opposed by Democratic senator Elizabeth Warren, who considered his nomination an indicator that of the Trump’s administration designs to “put the interests of giant corporations ahead of the American people”.
Warren warned that concentration across markets, including entertainment and telecom sectors, served to reduce consumer choice and helped to undermine economic security for middle-class Americans.
While the president has no direct power to intervene, many believed his insistent criticism of CNN would ultimately endanger the AT&T-Time Warner sale.
But it is not yet clear how either AT&T and Time Warner plan to address Delrahim’s demand for asset sales to address competitive harm. Time Warner reportedly views CNN as a key asset among properties that include Warner Bros studio, HBO, TNT and TBS.
The justice department did not immediately comment on the matter.
The companies have said they plan to pursue the deal despite the threat from regulators since they have little recourse if the DoJ blocks the deal. Shares in Time Warner fell 7%, compared with the $107.50 offer price; AT&T shares were little changed.
