It seemed like a match made in media heaven. AT&T is a telecommunications giant whose reach stretches to millions of people all over the country, and Time Warner, the owner of CNN, HBO and Warner Bros., has content galore. Together, the two companies would create a colossus straddling the worlds of internet access, news and entertainment.
Until last week, AT&T’s pending $85.4 billion acquisition of Time Warner seemed destined to close by the end of the year. On Wednesday, however, tensions between the Justice Department and executives at the two companies spilled out into the open.
Now it seems possible that the Justice Department and AT&T will end up battling each other in court. The ongoing negotiations have also demonstrated how the Trump administration may regulate big-ticket mergers and acquisitions, representing the first major test for the government’s antitrust strategy.
A central component of the dispute, according to people from both companies and the Justice Department, is CNN — the network that Trump has frequently attacked as a purveyor of “fake news.”
Late last week, AT&T called the Justice Department to request a meeting between top antitrust officials and AT&T’s chief executive officer, Randall Stephenson. On Monday, at the Justice Department headquarters in Washington, Stephenson and AT&T’s general counsel, David McAtee, met with Makan Delrahim, the new assistant attorney general for the department’s antitrust division, and other Justice Department officials.
In one account of the meeting, Justice Department officials called on AT&T to sell Turner Broadcasting, the group of cable channels under the Time Warner banner that includes CNN, as a potential requirement for gaining government approval, according to three people from the companies involved, who spoke on the condition that they not be named because of the delicacy of the negotiations.
Or, the people said AT&T could sell off DirecTV, the satellite television provider that it bought two years ago for nearly $49 billion. But AT&T and Time Warner executives say privately that such a concession is not realistic, given that DirecTV and its DirecTV Now streaming service would be crucial to a combined AT&T-Time Warner.
A different account emerged later. It was Stephenson who had offered to sell off CNN as part of a strategy to win governmental approval, according to two Justice Department officials who declined to speak publicly about the meeting. The officials also insisted that selling the cable news channel would not be enough to address antitrust concerns.