Nov. 8 (UPI) — The Justice Department will only approve the $85.4 billion merger of AT&T and Time Warner if certain assets are sold, including Turner Broadcasting or DirecTV, according to sources attending a meeting with department officials.
The government wants AT&T to divest from all of Turner, which includes CNN, TNT and TBS, or sell the satellite TV service, according The New York Times and CNN.
The deal was announced on Oct. 22. Justice Department and company officials met Monday, according to CNN.
The combined company would offer wireless and broadband Internet service, satellite TV, the Warner Brothers movie studio and cable channels, including HBO.
AT&T and Time Warner could sue to challenge the government’s legal basis for blocking the transaction or demanding the asset sales.
“Threatening Turner is a fig leaf for threatening CNN,” one of the sources said to CNN.
President Donald Trump, who has called CNN “fake news,” has criticized the merger. During the presidential campaign, he argued that “deals like this destroy democracy” and cited it as “an example of the power structure” that he was fighting.
On last Sunday’s Reliable Sources on CNN, counselor to the president Kellyanne Conway said “we’re not going to interfere with that here.”
AT&T was among the top donors to Trump’s inauguration and AT&T hired lobbyists close to Vice President Mike Pence and others in the Trump administration.
“We are in active discussions with the DOJ,” John Stephens, AT&T’s chief financial officer, said at a Wells Fargo investors conference Wednesday. “I cannot 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 proposed deal considered a “vertical” merger, which means the two companies in the deal are non-competitors.
“For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market,” AT&T said last week. “While we won’t comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception.”
Diana Moss, president of the American Antitrust Institute, told The New York Times that the “DOJ would have to show that a combined entity has the incentive as a vertically integrated company to foreclose rival content producers and/or rival distributors from access to content.”
In 2011, the Obama administration approved Comcast’s acquisition of NBC Universal. The Justice Department and Federal Communications Commission required Comcast to not withhold content from rival streaming services.
