Justice, AT&T trade accusations over CNN sale

The Department of Justice (DOJ) and ATT traded accusations on Wednesday over whether the company would have to sell off CNN, the cable network frequently feuding with President Trump, as a condition of its merger with Time Warner.

Sources at the Justice Department told The Hill and other news outlets that antitrust officials had rejected an offer from ATT on Monday to divest in CNN in order to win approval for the $85 billion deal.

The sources, who spoke on the condition of anonymity, said that the offer did not alleviate their concerns that the deal could potentially harm the public by giving the new company too much power to deliver only the content it produces through ATT’s networks.

ATT CEO Randall Stephenson, however, flatly denied that his company had ever entertained the idea of selling CNN to win approval of the deal.

“Until now, we’ve never commented on our discussions with the DOJ. But given DOJ’s statement this afternoon, it’s important to set the record straight,” said Stephenson, referring to the anonymous quotations from Justice sources.

“Throughout this process, I have never offered to sell CNN and have no intention of doing so.”

It is highly unusual for details of such offers to emerge in public, and the startling back-and-forth between Stephenson and the Justice Department will raise new questions about whether the deal can be consummated.

It was also impossible not to consider Trump’s ongoing feud with CNN, which is run by a former NBC executive who worked with Trump on “The Apprentice.”

The president frequently rips CNN as “fake news,” and earlier this year tweeted out a video from his 2007 “WrestleMania” appearance that was edited to show Trump beating up someone with the CNN logo imposed on their head.

On the campaign trail last year, Trump vowed to block the deal, but since he took office, most observers predicted that the $85 billion transaction would sail through the regulatory review.

Before Stephenson’s public comments, The New York Times reported that Justice had told ATT and Time Warner to either sell off CNN’s parent company, Turner Broadcasting, or DirecTV as a condition of approving their proposed merger. ATT bought DirecTV in 2015 for $48.5 billion.

The Hill’s sources said that ATT only offered to sell off CNN, and not Turner.

The Financial Times was the first to report that Justice had asked Time Warner to spin off CNN.

“It’s all about CNN,” a source told The Financial Times.

The Wall Street Journal reported last week that the Justice Department was weighing a lawsuit to block the deal.

Some Democrats were quick to seize on the latest reports as evidence of political interference by the White House.

“Presidential power must be used wisely and fairly. I don’t know the details here but this is worth investigating,” Sen. Brian SchatzBrian Emanuel SchatzOvernight Energy: Dems grill Trump NASA pick | House passes wildfire reform bill | Court rejects Sierra Club lawsuits on natural gas Dems tear into Trump’s NASA nominee Overnight Defense: Mattis says authority for North Korea action limited to ‘imminent’ threats | Corker vows to take up new war measure soon | CBO puts .2T price tag on updating nuclear triad MORE (D-Hawaii) wrote in a tweet.

“The burden of proof is on the Justice Department to establish that there is no political interference in their Antitrust Division,” he added.

Democrats will have a chance to grill Attorney General Jeff SessionsJefferson (Jeff) Beauregard SessionsCurtis wins Chaffetz’s former Utah House seat Overnight Cybersecurity: What we learned from Carter Page’s House Intel testimony | House to mark up foreign intel reform law | FBI can’t access Texas shooter’s phone | Sessions to testify at hearing amid Russia scrutiny FBI can’t unlock Texas shooter’s phone MORE on the topic when he testifies before the House Judiciary Committee next week.

The news comes on the same day that one of ATT’s top executives suggested that the deal has hit some roadblocks. The company has been saying for months that the merger is expected to close by the end of the year, but now John Stephens, ATT’s chief financial officer, says that it’s unclear when the two companies will get the green light from regulators.

“I can’t comment on those discussions, but with those discussions, I can now say that the timing of the closing of the deal is now uncertain,” Stephens said at a conference in New York Tuesday, according to The Wall Street Journal.

Stephens emphasized that a “vertical merger like this hasn’t been blocked for over 40 years.”

There were few signs of trouble for the merger until July of this year, when The New York Times, citing an administration official, reported that the White House was exploring how to use the deal as leverage over CNN.

The report touched off criticism from Democrats, who are vehemently opposed to the deal but are wary of any White House interference in Justice Department proceedings.

“Although I have raised serious questions about the impact of ATT’s proposed acquisition of Time Warner, Inc., the transaction should be judged solely on its impact on competition, innovation, and consumers, not as ‘leverage’ for political gain,” Sen. Amy KlobucharAmy Jean KlobucharSenators push mandatory sexual harassment training for members, staff CNN to air sexual harassment Town Hall featuring Gretchen Carlson, Anita Hill Former Hill staff calls for mandatory harassment training MORE (D-Minn.), the top antitrust Democrat, wrote in a letter to Attorney General Jeff Sessions over the summer.

Critics of the deal worry that ATT’s control over programming would allow the combined company to give its own content favorable treatment, hurting competing networks. They also argue that the merger could lead to consumers paying higher prices for certain content.

In June, a group of Senate Democrats led by Sen. Al FrankenAlan (Al) Stuart FrankenOvernight Tech: Senate panel subpoenaed ex-Yahoo chief | Twitter gives all users 280 characters | FBI can’t access Texas shooter’s phone | EU wants tax answers from Apple Week ahead: DHS nominee heads before Senate | Ex-Yahoo chief to testify on hack | Senators dig into election security Feinstein: Sessions should re-testify on Russia meetings MORE (D-Minn.) wrote a letter to Sessions criticizing the deal. In that letter, Democrats warned of potential problems of the merged company owning CNN and argued that no conditions would be sufficient to reduce the deal’s potential harm.

“Allowing one giant company like a combined ATT-Time Warner to control the content available to Americans would threaten the basic principles of our democracy, especially given Time Warner’s ownership of key information sources like CNN,” the Democrats wrote.

“With both the incentive and the ability to direct consumers to Time Warner-owned content, ATT-Time Warner could restrict its subscribers’ access to alternative viewpoints, such as those offered by competing news outlets like Fox, MSNBC, or Breitbart.”

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