Justice, AT&T trade accusations over CNN sale

The Department of Justice (DOJ) and AT&T traded accusations on Wednesday over whether the company would have to sell off CNN, the cable network frequently feuding with President Trump, as a condition of its merger with Time Warner.

Sources at the Justice Department told The Hill and other news outlets that antitrust officials had rejected an offer from AT&T on Monday to divest in CNN in order to win approval for the $85 billion deal.

The sources, who spoke on the condition of anonymity, said that the offer did not alleviate their concerns that the deal could potentially harm the public by giving the new company too much power to deliver only the content it produces through AT&T’s networks.

{mosads}AT&T CEO Randall Stephenson, however, flatly denied that his company had ever entertained the idea of selling CNN to win approval of the deal.

“Until now, we’ve never commented on our discussions with the DOJ. But given DOJ’s statement this afternoon, it’s important to set the record straight,” said Stephenson, referring to the anonymous quotations from Justice sources.

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

It is highly unusual for details of such offers to emerge in public, and the startling back-and-forth between Stephenson and the Justice Department will raise new questions about whether the deal can be consummated.

It was also impossible not to consider Trump’s ongoing feud with CNN, which is run by a former NBC executive who worked with Trump on “The Apprentice.”

The president frequently rips CNN as “fake news,” and earlier this year tweeted out a video from his 2007 “WrestleMania” appearance that was edited to show Trump beating up someone with the CNN logo imposed on their head.

On the campaign trail last year, Trump vowed to block the deal, but since he took office, most observers predicted that the $85 billion transaction would sail through the regulatory review.

Before Stephenson’s public comments, The New York Times reported that Justice had told AT&T and Time Warner to either sell off CNN’s parent company, Turner Broadcasting, or DirecTV as a condition of approving their proposed merger. AT&T bought DirecTV in 2015 for $48.5 billion.

The Hill’s sources said that AT&T only offered to sell off CNN, and not Turner.

The Financial Times was the first to report that Justice had asked Time Warner to spin off CNN.

“It’s all about CNN,” a source told The Financial Times.

The Wall Street Journal reported last week that the Justice Department was weighing a lawsuit to block the deal.

Some Democrats were quick to seize on the latest reports as evidence of political interference by the White House.

“Presidential power must be used wisely and fairly. I don’t know the details here but this is worth investigating,” Sen. Brian Schatz (D-Hawaii) wrote in a tweet.

“The burden of proof is on the Justice Department to establish that there is no political interference in their Antitrust Division,” he added.

Administration officials pushed back Wednesday night, saying the White House had not intervened in the merger.

“I have never been instructed by the White House on this or any other transaction under review by the antitrust division,” Makan Delrahim, the assistant attorney general for the anti-trust division told The Hill. 

White House spokesman Raj Shah similarly said that Trump has not spoken with the Justice Department on the deal. 

“The President did not speak with the Attorney General about this matter, and no White House official was authorized to speak with the Department of Justice on this matter,” Shah said in a statement to The Hill.

Democrats will have a chance to grill Attorney General Jeff Sessions on the topic when he testifies before the House Judiciary Committee next week.

The news comes on the same day that one of AT&T’s top executives suggested that the deal has hit some roadblocks. The company has been saying for months that the merger is expected to close by the end of the year, but now John Stephens, AT&T’s chief financial officer, says that it’s unclear when the two companies will get the green light from regulators.

“I can’t comment on those discussions, but with those discussions, I can now say that the timing of the closing of the deal is now uncertain,” Stephens said at a conference in New York Tuesday, according to The Wall Street Journal.

Stephens emphasized that a “vertical merger like this hasn’t been blocked for over 40 years.”

There were few signs of trouble for the merger until July of this year, when The New York Times, citing an administration official, reported that the White House was exploring how to use the deal as leverage over CNN.

The report touched off criticism from Democrats, who are vehemently opposed to the deal but are wary of any White House interference in Justice Department proceedings.

“Although I have raised serious questions about the impact of AT&T’s proposed acquisition of Time Warner, Inc., the transaction should be judged solely on its impact on competition, innovation, and consumers, not as ‘leverage’ for political gain,” Sen. Amy Klobuchar (D-Minn.), the top antitrust Democrat, wrote in a letter to Attorney General Jeff Sessions over the summer.

Critics of the deal worry that AT&T’s control over programming would allow the combined company to give its own content favorable treatment, hurting competing networks. They also argue that the merger could lead to consumers paying higher prices for certain content.

In June, a group of Senate Democrats led by Sen. Al Franken (D-Minn.) wrote a letter to Sessions criticizing the deal. In that letter, Democrats warned of potential problems of the merged company owning CNN and argued that no conditions would be sufficient to reduce the deal’s potential harm.

“Allowing one giant company like a combined AT&T-Time Warner to control the content available to Americans would threaten the basic principles of our democracy, especially given Time Warner’s ownership of key information sources like CNN,” the Democrats wrote.

“With both the incentive and the ability to direct consumers to Time Warner-owned content, AT&T-Time Warner could restrict its subscribers’ access to alternative viewpoints, such as those offered by competing news outlets like Fox, MSNBC, or Breitbart.”