The U.S. Department of Justice is demanding the sell-off of CNN so its parent company Time Warner can be bought by AT&T, it was reported Wednesday.
The Financial Times said that the department, which regulates competition, has told AT&T that the entire Turner Broadcasting group of channels must go if the mega-merger is to go ahead.
Turner Broadcasting is the Time Warner division which holds CNN, Cartoon Network, TBS, TNT, Turner Classic Movies and a series of internet properties, including Bleacher Report.
But it is CNN which has been the focus of the president’s ire, with him repeatedly attacking the ‘fake news’ network in person and on Twitter.
The DoJ is pushing AT&T Inc to sell assets or come up with other ways of satisfying antitrust concerns over its purchase of Time Warner Inc, a new and potentially costly obstacle to the U.S. No. 2 wireless carrier’s effort to buy the large entertainment company.
On the block: CNN is one of the assets AT&T and Time Warner could be forced to sell to get regulatory approval for one of the biggest-ever media mergers
Notorious: Trump courted controversy with a video showing him beating up the ‘fake news’ CNN – he retweeted it and faced claims its original creator was a white supremacist
Enemies list: Trump has been vocal in is opposition to the news channel
The development came as a surprise to investors. Shares of Time Warner fell 3 percent to $91.75, while AT&T shares were down 0.5 percent at $32.90.
The Justice Department’s demand is likely to complicate its continuing antitrust conversations with AT&T, which said on Wednesday it was now uncertain when the $85.4 billion deal, announced in October 2016, would be completed.
AT&T had previously said the acquisition would close by the end of this year.
The Justice Department wants AT&T to suggest ‘structural remedies’ to make the deal acceptable, a source familiar with the matter told Reuters on Wednesday.
The Justice Department did not immediately respond to requests for comment. AT&T declined comment.
AT&T wants to buy Time Warner, which owns the premium channel HBO, movie studio Warner Bros and news channel CNN, so it can bundle mobile service with video entertainment. Both companies have struggled to keep younger viewers from flocking to online services like Netflix Inc and Amazon.com Inc’s Prime Video.
The deal is opposed by an array of consumer groups and smaller television networks on the grounds that it would give AT&T too much power over the content it would distribute to its wireless customers.
Trump criticized the deal on the campaign trail last year and vowed that as president his Justice Department would block it.
‘All approvals have been received but for the DOJ,’ AT&T’s Chief Financial Officer John Stephens told a conference in New York.
‘We are in active discussions with the DOJ. I cannot comment on those discussions,’ he said. ‘But with those discussions I can now say that the timing of the closing of the deal is now uncertain.’
In his crosshairs: Trump has repeatedly called CNN ‘fake news’ and called for investigations into it and other media enemies
It is normal for parties in a merger to be encouraged by the Justice Department to come up with their own ways to alleviate antitrust concerns that a deal might lessen competition or hurt consumers.
Stephens’ comments signal to investors that the Justice Department could sue to block or revise the merger and the company would fight in court to try to win approval, a person briefed on the matter told Reuters.
Another sticking point in discussions is the length of time that the U.S. government wants to impose conditions on what AT&T can and cannot do. Two people briefed on the talks told Reuters the government has sought as long as 10 years for such conditions while AT&T has pressed for a shorter period.
AT&T also said it would invest an additional $1 billion in the United States next year if Trump signed into law the provisions in the current House of Representatives tax bill.
‘By immediately lowering the corporate tax rate to 20 percent, this bill will stimulate investment, job creation and economic growth in the United States,’ said Randall Stephenson, AT&T chief executive.