AT&T-Time Warner deal hits Trump wall
09 November 2017
The Trump administration has reportedly demanded sale of assets such as CNN before it would approve an $85bn (£65bn) Time Warner and AT&T merger, as critics, including President Donald Trump, say the merger would lead to a concentration of media power.
AT&T's proposed purchase of Time Warner would combine its nation-wide cable TV network with Time Warner's entertainment prowess, including the Warner Bros studio and HBO as well as CNN's parent Turner Broadcasting.
AT&T chief financial officer John Stephens told a conference in New York "there are all kinds of benefits" to the combination and noted that the government has not blocked this kind of vertical tie-up in decades.
But, with critics, who include US President Donald Trump, saying it would concentrate media power, Stephens told investors there was no certainty about the timing, amid active discussions with the Department of Justice.
Reports say there was a crucial meeting on Monday between AT&T CEO Randall Stephenson and DOJ's antitrust chief Makan Delrahim during which the two discussed divestitures that might satisfy the government's concerns.
However, reports says, sources on both sides disagree about who proposed what. An AT&T executive later said he no longer expected the deal to close this year.
Competition regulators at the Department of Justice are in charge of reviewing the proposal, not the president.But the person in charge of the antitrust division reportedly involved in the talks was recently installed and was the President's pick.
Regulators are looking at questions such as whether AT&T could raise prices for Time Warner content for other companies - higher costs that could eventually trickle down to consumers.
Competition authorities have been scrutinising the takeover since it was announced in 2016.
Earlier this year, lawmakers, including Senator Amy Klobuchar, a Democrat from Minnesota, said the deal raises antitrust questions.
But she also said its review should be free from White House influence. She cited a report in the New York Times that the White House viewed the pending merger as a possible point of leverage over news coverage.
"Any political interference in antitrust enforcement is unacceptable," she said.
The Department of Justice declined to comment. AT&T said it is prepared to fight any divestitures.
"Throughout this process, I have never offered to sell CNN and have no intention of doing so," chief executive Randall Stephenson said.
For AT&T the takeover is a natural response to the disruption caused by the internet, which is changing the way television and other media reach audiences.
Most analysts had expected the deal to be approved.
Shares of Time Warner fell about 6 per cent to $89.00, while AT&T shares fell 0.2 per cent before climbing 1.16 per cent to $33.46.