US Demands Sale Of CNN Or DirecTV To Approve AT&T-Time Warner Deal

(RTTNews) - The U.S. Justice Department has informed AT&T (T) that it will block the telecommunications giant's planned $85 billion takeover of Time Warner unless it sells off CNN, according to reports citing people familiar with the matter.

The Justice Department has raised the prospect that the telecom giant would have to divest either the Turner television unit, which includes CNN along with other cable channels, or the satellite DirecTV business, the reports said.

The two sides have engaged in recent tense settlement discussions to address the agency's concerns about the transaction, which would put CNN, HBO and the Warner Bros. film studio under the same corporate roof as satellite broadcaster DirecTV and more than 100 million wireless users.

AT&T and the Justice Department are far apart. AT&T offered to sell the CNN business, but the agency rejected the idea. AT&T denied it offered to sell the news network, the reports said.

AT&T Chairman and CEO Randall Stephenson reportedly said the company never offered to sell CNN and has no intention of doing so to win approval of the Time Warner deal.

Rather than a major divestment, AT&T is preparing to fight any potential legal challenge in court, arguing the opposition is politically motivated since there is no overlap between the two companies' business lines, the reports said.

The Wall Street Journal reported last week that The U.S. Justice Department is laying the groundwork for a possible lawsuit to stop the deal while at the same time negotiating with company executives.