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AT&T may need to jettison CNN to close Time Warner deal

The US Justice Department is reportedly asking the telecom giant for concessions.

Now playing: Watch this: AT&T could sell CNN to gain DOJ approval of Time Warner...
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Has CNN become a key factor in AT&T's potential buyout of Time Warner?

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AT&T's $85.4 billion acquisition of Time Warner has hit a snag. 

To close the deal, the US Justice Department is demanding that the Dallas-based telecommunications giant sell Turner Broadcasting, which includes CNN, according to the Financial Times (account required), which cited unnamed sources. The New York Times reported that AT&T could also win approval if it sold its DirecTV unit, which it just acquired in 2015. 

The reports are accurate, according to people familiar with the situation. 

CNN and Turner Broadcasting is a principal asset at Time Warner, which includes movie and television studios such as HBO, as well as publishing and music businesses. AT&T is hoping to use its acquisition of Time Warner to cement its position as a Hollywood powerhouse, diversifying itself away from offering just phone, wireless and pay-TV services. 

AT&T and Time Warner would go to court to challenge the government's legal basis for blocking the deal if these demands are formally made, the Times reported.

"Until now, we've never commented on our discussions with the DOJ," AT&T CEO Randall 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."

AT&T Chief Financial Officer John Stephens said this morning that it was unclear when the deal would close. The company had previously said the transaction would be completed by the end of the year, but last month it extended the deadline

A Time Warner spokesman declined to comment. 

A spokesman for the Justice Department declined to comment on the AT&T-Time Warner deal. 

"The Department is committed to carrying out its duties in accordance with the laws and the facts. Beyond that, the Department does not comment on any pending investigation."

President Donald Trump has been a frequent critic of CNN, often calling its content "fake news" and arguing that the news channel presents him in an unfavorable light. During the presidential campaign last year, Trump said he would squash the deal if he were to become president.

First published Nov. 8, 11:39 a.m. PT
Update, 12:57 p.m.: Adds comment from AT&T CEO Randall Stephenson.
Update, 2:22 p.m.: With Time Warner declining to comment.

Update, Nov. 9, 9 a.m.: Adds Justice Department comment. 

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