Report: DOJ demands CNN sale before AT&T, Time Warner deal is approved

The Department of Justice has told AT&T that Time Warner must sell CNN in order to approve its $84.5 billion acquisition of the media company, according to the Financial Times.

Citing "three people with direct knowledge of the negotiations," the Financial Times reported on Wednesday that Time Warner must sell the cable news channel before the U.S. antitrust authority signs off on the deal.

The liberal CNN is considered the crown jewel of the Time Warner portfolio, despite an ongoing feud with President Trump, who mocks the network as “fake news” on a regular basis.

CNN Worldwide president Jeff Zucker has essentially installed an anti-Trump programming strategy that has helped the network’s ratings and digital traffic. It’s unclear if AT&T would be interested in moving forward with the proposed deal if CNN is no longer part of the package.

“AT&T is opposed to selling the TV network and is preparing to take the Trump administration to court, arguing the deal with Time Warner does not pose any competition violations,” the Financial Times reported.

A source with direct knowledge of the talks between the company and the DOJ told the Times that, “It’s all about CNN.” The source also told the paper that regulators have made it clear to AT&T executives that if it sold CNN, the deal would go through.

The deal was initially expected to become official before the end of the year but AT&T CFO John Stephens said “the closing of the deal is now uncertain” when speaking at the Wells Fargo Media & Telecom Conference in New York City on Wednesday.

“We are in active discussions with the [Department of Justice]. Those are continuing on. 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. "With regards to the transaction, everything continues as we've expressed in the past."

Republican presidential candidates, former Florida Gov. Jeb Bush, right, and Donald Trump both speak during the CNN Republican presidential debate at the Ronald Reagan Presidential Library and Museum on Wednesday, Sept. 16, 2015, in Simi Valley, Calif. (AP Photo/Mark J. Terrill)

Trump has publically opposed the deal but Justice Department antitrust division Chief Makan Delrahim has said he didn’t feel the merger posed a “major antitrust problem” before taking the gig. Delrahim has since changed his mind, according to the Times, people citing “with direct knowledge of the antitrust negotiations.”

While highly unusual, the decision is not a complete shock to industry insiders. Fox Business Network Senior Correspondent Charlie Gasparino noted back in January that bankers believe a spinoff of CNN would accelerate approval of the deal.

"You may see, as bankers are saying, the potential spinoff of CNN to make this deal go by," Gasparino said. "There is a lot of talk about that, and there will be buyers."

Gasparino noted that CBS inquired about the sale of CNN back in 2014.

“The Department is committed to carrying out its duties in accordance with the laws and the facts. Beyond that, the Department does not comment on any pending investigation,” a Justice Department spokesperson told Fox News. 

Time Warner and AT&T did not respond to the Financial Times’ request for comment. 

Brian Flood covers the media for Fox News. Follow him on Twitter at @briansflood.