U.S. worried AT&T and Time Warner would hike costs for media rivals

Technology


WASHINGTON (Reuters) – U.S. antitrust regulators believe that AT&T Inc’s proposed acquisition of Time Warner Inc (TWX.N) would raise costs for rival entertainment distributors and stifle innovation, a Department of Justice official told Reuters on Thursday.

The AT&T logo is seen on a store in Golden, Colorado United States July 25, 2017. REUTERS/Rick Wilking

Allaying those concerns is the rationale for the Justice Department’s demand that AT&T sell assets in order for the deal to be approved, said the official, speaking on condition of anonymity.

The Justice Department wants AT&T to sell its DirecTV unit or sell Time Warner’s Turner Broadcasting unit, which includes news company CNN, sources told Reuters on Wednesday.

AT&T has signaled it would not agree to sell DirecTV, which it acquired for $49 billion in 2015, leaving CNN and other cable TV assets as the main sticking point in negotiations between the Justice Department and AT&T.

That has raised concerns about political influence on the $85.4 billion deal, given U.S. President Donald Trump’s frequent criticism of CNN. As a candidate, Trump vowed to block the deal shortly after it was announced in October 2016, but has not addressed the issue publicly as president.

The head of the Justice Department’s antitrust division, Makan Delrahim, said in a statement late on Thursday that he has “never been instructed by the White House” on the AT&T deal.

Raj Shah, a White House spokesman, said in a separate statement that Trump “did not speak with the Attorney General about this matter, and no White House official was authorized speak with the Department of Justice on this matter.”

AT&T CEO IN SPOTLIGHT

Later on Thursday, AT&T chief executive Randall Stephenson is expected to defend the merger at a New York City media conference. He will argue the vertical deal will not harm competition and is similar to deals approved in the past, a source briefed on the matter said.

The company has opposed divesting assets and has told the government it is willing to fight in court to win approval, sources said on Wednesday.

The deal is opposed by an array of rivals and consumer groups worried that it would give the combined company too much power. Opponents are pushing for conditions that would limit AT&T’s ability to charge media rivals higher prices to carry Time Warner content.

Shares of Time Warner fell 1.4 percent on Thursday to $87.27 in heavy volume. AT&T shares rose 1.5 percent to $33.93.

Reporting by David Shepardson; Editing by Bill Rigby

Our Standards:The Thomson Reuters Trust Principles.



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