US Said to Seek Sale of CNN or DirecTV in AT&T-Time Warner Deal

President Trump has long accused CNN of harboring a bias against him.

Separately, Mr. Trump has criticized the proposed merger from a populist perspective. In the final weeks of the presidential campaign, he argued that “deals like this destroy democracy” and cited it as “an example of the power structure” that he was fighting.

While critics of the merger have described it as a sign that there is too much consolidation in the media and telecommunications industries, analysts have said that there were few legal grounds on which to block the transaction.

At an investor conference on Wednesday, John Stephens, ATT’s chief financial officer, said that the timing of the deal’s closing, which had been scheduled by year’s end, was now uncertain. The only remaining issue to be resolved, he added, was Justice Department approval.

“We are in active discussions with the D.O.J.,” Mr. Stephens said. “I cannot comment on those discussions. But with those discussions, I can now say that the timing of the closing of the deal is now uncertain.”

Executives at both ATT and Time Warner have privately expressed bewilderment about the request from the Justice Department. Because the proposed deal is a “vertical” merger — meaning that neither company competes directly against the other — they believe there is little legal basis to block it.

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To win approval of the deal, ATT hired lobbyists close to Vice President Mike Pence and others in the Trump administration. ATT was among the top donors to Mr. Trump’s inauguration.

ATT’s chief executive, Randall Stephenson, had attended at least two meetings with Mr. Trump this year. Shortly after the first one, Mr. Trump lashed out at CNN on Twitter, saying of the news network that “their credibility will soon be gone!” After the second meeting, which was focused on emerging technologies, the president said that Mr. Stephenson was doing “really a top job.”

Fighting the deal could prove challenging for regulators, antitrust experts said. The Justice Department would have to argue that ATT would have an incentive to withhold Turner channels like CNN or its NBA on TNT from rival broadband distributors like Verizon or Comcast. It could also try to demonstrate that ATT would give CNN or TNT preferential treatment, making it difficult for competitors like Fox News or ESPN to reach ATT customers.

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To block the deal, Justice Department lawyers would have to successfully show that these effects would hurt consumers in the form of higher prices or fewer choices, antitrust lawyers said.

“Because this is a vertical merger that combines distribution with content, the D.O.J. would have to show that a combined entity has the incentive as a vertically integrated company to foreclose rival content producers and/or rival distributors from access to content,” Diana Moss, president of the American Antitrust Institute, said.

The biggest counterweight to such an argument is the Obama administration’s 2011 approval of Comcast’s acquisition of NBC Universal. In that case, the Justice Department and Federal Communications Commission attached several conditions to Comcast’s business practices, including promises that Comcast would not withhold content from rival streaming services.

Such conditions, known as behavioral remedies, have been typical in vertical mergers. The Justice Department’s demand for divestitures would be a major change in antitrust policy, experts said.

Halting the deal between ATT and Time Warner would require regulators to prove that previous mergers had resulted in worse service for consumers and that shedding assets would be better than behavioral remedies.

Spokesmen for ATT and Time Warner declined to comment. A Justice Department representative declined to comment.

Cecilia Kang, Brooks Barnes and John Koblin contributed reporting.


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