AT&T’s (NYSE:T) $85 billion deal to buy Time Warner (NYSE:TWX) could mean that cable-channel CNN is not part of the final package.
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The Department of Justice is actively considering a lawsuit to challenge the deal, as reported by The Wall Street Journal citing people familiar with the matter who also note, the DOJ might consider approving the deal with certain conditions – but the two sides are “not close” to an agreement.
Time Warner shares plunged following the reports. AT&T shares also dropped.
According to a statement from AT&T, “When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios. For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won't comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception.”
Often, asset divestments are required before mega mergers such as the proposed AT&T/ Time Warner can win regulator’s approval.
Back in January, FOX Business’s Charlie Gasparino reported, a potential spinoff of CNN would “make this deal [TWX / ATT] go by.” He added, “There is a lot of talk about that, and there will be buyers." Gasparino noted that one potential suitor could be CBS (NYSE:CBS). Gasparino also reported CNN head Jeff Zucker could present challenges for the deal. Trump frequently criticizes CNN for reporting so-called “fake news”.
Trump himself made it clear on the campaign trail that he did not favor the deal in its current form.
“AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it is too much concentration of power in the hands of too few,” he said.
At the time of publication, Time Warner and CBS did not immediately respond to FOX Business’ request for comment.