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AT&T Ramps Up Preparations to Fight With U.S. Over Time Warner

  • If approval requires sale of assets, case could head to court
  • AT&T said unwilling to part with CNN, HBO, TNT, WB studio

AT&T Inc. is ramping up preparations to fight the U.S. Justice Department in court if the agency sues to block the $85.4 billion acquisition of Time Warner Inc., according to people familiar with the matter.

AT&T is instructing its legal team to prepare for a possible court battle on growing concerns that antitrust division chief Makan Delrahim wants the telecommunications giant to divest assets, said the people, who asked not to be identified discussing private information. The timing of the deal, originally expected to close by the end of the year, is now uncertain, AT&T Chief Financial Officer John Stephens said Wednesday.

AT&T’s merger agreement with Time Warner says the companies will pursue the deal until there’s no way to appeal an order blocking the transaction. AT&T shares were little changed at $33.08 at 1:12 p.m. in New York, while Time Warner fell 4.2 percent to $90.71, compared with the $107.50 offer price.

Delrahim took over the review of the deal in September after he was confirmed by Congress, slowing down the process as he got up to speed, people familiar with the matter said last week. He’s looking for ways to remedy the competitive issues posed by the combination of AT&T’s vast communications network and Time Warner’s media empire.

Delrahim took over the review after months of investigation by the staff attorneys and economists at the antitrust division. While negotiations with the companies have focused on conduct remedies, Delrahim may seek asset sales to address competitive harm, according to one of the people.

But it’s not clear if AT&T would be willing to part with anything it’s acquiring from Time Warner. The company has said it considers CNN, the news network that has been a lightning rod for President Donald Trump, a prize asset, and the company also considers properties such as the Warner Bros. studio, HBO, TNT and TBS essential, people familiar with the matter said. AT&T Chief Executive Officer Randall Stephenson wants to pair all the programming those divisions produce with advertising and other services to create new sources of revenue.

— With assistance by David McLaughlin