FOR RSS

DOJ tells AT&T to sell CNN or DirectTV if it wants its $85.4 billion Time Warner purchase approved

AT&T ordered to sell CNN or DirectTV in order to gain approval of Time Warner purchase. (Kena Betancur/Getty Images)

AT&T may be forced to sell Turner Broadcasting or its DirecTV satellite television unit to satisfy antitrust concerns over its purchase of Time Warner Inc.

The $85.4 billion acquisition, announced in October 2016, was previously expected to close by the end of the year.

AT&T, the world's largest telecommunications conglomerate, is ready to put up a fight against the Justice Department's divestiture demands in order to win regulatory approval of the deal, according to Reuters. Turner Broadcasting is the parent company of  the CNN cable network, which has been a frequent target of criticism from president Donald Trump.

It's no longer clear when the merger will be completed.

What's the story?

Executives at both AT&T and Time Warner have expressed confusion about the Justice Department's request, the New York Times reported.

Both companies have called the proposed deal a "vertical merger." A vertical merger is a merger between two companies producing different goods or services for one specific finished product.

Makan Delrahim, who heads the Justice Department's antitrust department, may have changed his view of AT&T's purchase, Reuters reported.

Last year, Delrahim reportedly said during a TV interview that the deal would garner a lot of attention because of its size, but he didn't see it as “a major antitrust problem.” At the time of the interview, he was a law professor at Pepperdine University.

President Donald Trump nominated Delriham earlier this year to head Justice Department's antitrust department. He was confirmed in September.

Critics of the merger say there's too much consolidation in the media and telecommunications industries.

Could the merger be blocked?

In order to block the deal, Justice Department lawyers would have to successfully prove the deal would hurt consumers in the form of higher prices or fewer choices, antitrust lawyers told the New York Times.

“Because this is a vertical merger that combines distribution with content, the D.O.J. 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,” Diana Moss, president of the American Antitrust Institute, said.

In the final weeks of Trump's campaign, Reuters reported that he argued that “deals like this destroy democracy” and cited it as “an example of the power structure” that he was fighting.

Following the latest news, shares of Time Warner were down 6 percent at $89.00, while AT&T shares were down 0.2 percent at $33.15.

One last thing…
Watch TheBlaze live and on demand on any device, anywhere, anytime.
try premium
Exclusive video
All Videos
Watch BlazeTV on your favorite device, anytime, anywhere.
Try BlazeTV for Free
Sponsored content
Daily News Highlights

Get the news that matters most delivered directly to your inbox.