The Justice Department has called on AT&T and Time Warner to sell Turner Broadcasting, the group of cable channels that includes CNN, as a potential requirement for approving the companies’ pending $85.4 billion deal, people briefed on the matter told the New York Times on Wednesday.
The other possible way for the merger to win approval would be for AT&T to sell its DirecTV division, two of these people added.
The demands set up a potential battle over the fate of the long-in-the-works deal that would create a colossus straddling the worlds of media and telecommunications at a time when upstarts like Netflix are disrupting traditional players in both industries.
As originally envisioned, combining AT&T and Time Warner would yield a giant company offering wireless and broadband Internet service, DirecTV, the Warner Bros. movie studio and cable channels like HBO and CNN.
If the Justice Department formally makes either demand a requisite for approval, AT&T and Time Warner would almost certainly take the matter to court to challenge the government’s legal basis for blocking the transaction.
President Donald Trump has long accused CNN of harboring a bias against him.
Separately, 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, AT&T’s chief financial officer, said that the timing of the deal’s closing, which had been scheduled by year’s end, was now uncertain.
"We are in active discussions with the DOJ," 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."