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Time Warner should sell Turner Broadcasting, including CNN, or AT&T needs to sell DirecTV if the two companies expect the U.S. Department of Justice to approve an $85.4 billion merger of the companies anytime soon, according to a new report.
Time Warner and AT&T have already received calls from the Justice Department outlining its demands, The Hollywood Reporter confirmed Wednesday. The New York Times first reported the development.
On Wednesday, though, AT&T CEO Randall Stephenson made it clear that he has no intention of selling CNN in order to satisfy the DOJ.
“Until now, we’ve never commented on our discussions with the DOJ,” Stephenson said in an email to THR. “But given DOJ’s statement this afternoon, it’s important to set the record straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so.”
The Justice Department has not made its demands formal as of yet, but if it does, the results could be dramatic, as DirecTV and Turner, which includes not only CNN but also TNT, Cartoon Network and more, are major assets that AT&T and Time Warner believe would be strengthened by a merger. A forced sale of either could cause the two companies to rethink the deal.
Earlier Wednesday, in fact, AT&T CFO John Stephens told investors at a conference that all entities needing to approve the deal have already done so, except for the Justice Department. He said the companies are in discussions with the DOJ and added, “I can now say that the timing of the closing of the deal is now uncertain.”
News that the merger could be in jeopardy, or that its approval might require more concessions from the companies than investors had anticipated, caused shares of Time Warner to fall 6 percent to $88.75 in midday trading Wednesday.
If the deal falls through, shares of Time Warner could fall further, as they traded in the mid-$60 range prior to AT&T’s agreement to purchase the company for a premium.
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