Report: Justice Wants Turner or DirecTV Sale as Condition for AT&T-Time Warner OK

Time Warner shares down 5% as latest deal wrinkle emerges

The path to an AT&T-Time Warner merger got even murkier Wednesday after The New York Times reported that the U.S. Department of Justice would seek a divestiture of either Turner Broadcasting or DirecTV as a condition for its approval of a deal.

The Times, citing sources familiar with the companies, said the DOJ has asked that AT&T sell either Turner Broadcasting – Time Warner's group of cable channels that includes CNN, the news network President Donald Trump has repeatedly accused of airing “fake news” – or DirecTV, the satellite TV giant that AT&T purchased in 2015.

The possible conditions of the merger would appear to remove any purpose for doing the deal. When it announced the pairing in October 2016, AT&T said the inclusion of the Time Warner cable channels would fuel future over-the-top video offerings. DirecTV also is a core part of that strategy, with its more than 20 million pay TV subscribers. Its programming deals also were the foundation for AT&T’s over-the-top service DirecTV Now, which currently has about 1.5 million subscribers.

Once thought to be a relative shoo-in for regulatory approval – neither company has overlapping businesses – the path toward the finish line has been less clear in recent weeks. Earlier today, AT&T chief financial officer John Stephens said the timing of the Time Warner deal’s approval, once expected before the end of the year, is “now uncertain.”

AT&T and Time Warner would most likely sue if the government put such onerous conditions on the deal.

Read more at multichannel.com.