AT&T CEO Says He Won't Sell CNN as Tension Rises Over Antitrust

AT&T Inc. won’t sell CNN and never proposed such a deal, Chief Executive Officer Randall Stephenson said as a battle escalated with antitrust officials over the $85.4 billion acquisition of the network’s owner, Time Warner Inc.

Discussions of individual assets, including the division that includes CNN, have come up in conversations between the companies and Justice Department officials, according to people familiar with the matter. The Justice Department brought up the idea of divesting either DirecTV, the satellite provider, or Turner Broadcasting, which includes CNN, TNT and TBS, one of the people said. Another person said AT&T floated the idea of selling CNN and was rejected.

“Throughout this process, I have never offered to sell CNN and have no intention of doing so,” Stephenson said.

The fight over the deal was unexpected and is exploding over CNN, which has come under fire from President Donald Trump. While lawmakers are calling the uproar political, the Justice Department’s new leadership is taking a different view of the anticompetitive issues surrounding the deal than its predecessors under Barack Obama. The previous administration settled a similar tie-up between a pay-TV company and an entertainment giant, the acquisition of NBCUniversal by Comcast Corp., by imposing conditions.

No Fan

Makan Delrahim, who took up the reins at the antitrust division in September after he was confirmed by the Senate, has signaled he isn’t a fan of settlements that force the Justice Department into ongoing monitoring of companies’ behavior.

The two sides are far apart in getting a deal done, increasing the risk that talks could hit an impasse. Without an agreement, the Justice Department would sue to block the merger -- with a lawsuit possibly coming as soon as next week, one of the people said. The agency is concerned that AT&T’s ownership of Time Warner content could raise the costs of its pay-TV rivals, according to one of the people.

The Justice Department said it’s “committed to carrying out its duties in accordance with the laws and the facts,” according to a statement. “Beyond that, the Department does not comment on any pending investigation.”

AT&T is ramping up preparations to fight the Justice Department in court if it comes to that, instructing its legal team to prepare for battle, some of the people said. The timing of the deal, originally expected to close by the end of the year, is now uncertain, AT&T Chief Financial Officer John Stephens said Wednesday.

Time Warner shares fell 6.5 percent to $88.50 at the close in New York, compared with the $107.50 offer price. AT&T shares were up 1.1 percent to $33.44.

Prize Asset

It’s not clear if AT&T would be willing to part with anything it’s acquiring from Time Warner. The company has said it considers CNN a prize asset, and the company also considers properties such as the Warner Bros. studio, HBO, TNT and TBS essential, people familiar with the matter said.

Stephenson wants to pair all the programming those divisions produce with advertising and other services to create new sources of revenue.

Trump assailed the merger on the campaign trail, saying the tie-up would concentrate media power. That raised fears early in the process that Trump would interfere in the review. Delarahim told senators during his confirmation process that politics has no role in antitrust reviews.

Delrahim’s arrival at the Justice Department slowed down the process as he got up to speed, people familiar with the matter said last week. He’s looking for ways to remedy the competitive issues posed by the combination of AT&T’s vast communications network and Time Warner’s media empire.

Delrahim’s Arrival

Delrahim took over the review after months of investigation by the staff attorneys and economists at the antitrust division. Until now negotiations with the companies had focused on conduct remedies, according to one of the people.

On Wednesday, Senator Brian Schatz, a Democrat from Hawaii, tweeted that the burden is on the Justice Department to show there has been no political interference in the antitrust division and that Attorney General Jeff Sessions should be open about any communications with the White House on the deal.

On the other hand, Senator Richard Blumenthal, a Connecticut Democrat, praised the Justice Department for working to uphold competition and protecting CNN’s independence. “The Justice Department appears to be doing its job,” he said in a statement.