Business & Tech

AT&T merger fight said to head toward Thanksgiving showdown

Under the proposal, AT&T would acquire Time Warner Inc. for $84.5 billion.
Mark Lennihan/Associated Press
Under the proposal, AT&T would acquire Time Warner Inc. for $84.5 billion.

The US Justice Department is encouraging AT&T Inc. to address antitrust officials’ concerns about its $85.4 billion acquisition of Time Warner Inc. before the Nov. 23 Thanksgiving holiday or face a lawsuit to block the deal, people familiar with the matter said.

The department wants to keep AT&T, the biggest US satellite TV provider, from gaining Time Warner cable networks like TNT and CNN and then withholding their programming from competitors such as Comcast Corp., the people said. AT&T has said it has no incentive to do that. But the Justice Department prefers that AT&T either sell Time Warner’s Turner division, which owns TNT and CNN, or divest its DirecTV satellite unit to address the issue.

Antitrust officials advised AT&T to explore alternatives such as selling Turner and then forming a joint venture with the newly separated company, said two people, who asked not to be named because the conversations are private. Such a venture could sell advertising on the Turner networks to exploit AT&T’s user data, without the telecommunications giant owning the broadcasting unit, said one of the people.

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The companies aren’t discussing scenarios under which AT&T would sell the Turner or DirecTV satellite TV units, which AT&T chief executive officer Randall Stephenson has said he wouldn’t do, the people said.

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Time Warner shares fell 2.33 percent to $88.49, compared with AT&T’s $107.50-a-share offer price. AT&T was little changed at $34.17.

Representatives for AT&T, Time Warner, and the Justice Department declined to comment.

The proposed tie-up would reshape the media landscape by uniting the biggest pay-TV distributor with the owner of CNN, Warner Bros., TNT, TBS, and HBO. It represents the Justice Department’s first major antitrust test under President Trump, who as a candidate criticized the combination for consolidating too much power in one company and has repeatedly called CNN’s coverage of his administration “fake news.”

Trump on Saturday indicated the department may try to block the deal, saying “it will probably end up being maybe litigation, maybe not.”

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On Sunday, National Economic Council director Gary Cohn said the president isn’t participating in the review.

“The White House is not involved,” Cohn said on Fox’s  “Sunday Morning Futures.” “That’s a DOJ effort and it’s up to the DOJ what happens there.”

Thirteen months into the review of the proposed $85.4 billion merger, antitrust officials made it clear to AT&T executives last week that they don’t intend to allow the deal to go forward in its original form.

One argument AT&T has made in seeking approval is that it can use its data about internet and wireless subscribers to more accurately target consumer ads, earning higher ad rates and better competing with digital platforms such as Alphabet Inc.’s Google and Facebook Inc.