AT&T CEO Says Never Offered to Sell CNN

By BREAKING NEWS:AT&T CEO, CNN Updated at 2017-11-09 05:04:37 +0000

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NEW YORK/WASHINGTON (Reuters) - U.S. antitrust regulators and AT&T Inc sparred on Wednesday over whether the wireless carrier would be required to sell Time Warner Inc’s CNN cable network as a condition of approval of its deal to buy the media company.

The U.S. Department of Justice has demanded significant asset sales in order to approve the $85.4 billion deal, sources told Reuters on Wednesday, and asked AT&T to sell CNN-parent Turner Broadcasting or its DirecTV satellite TV operation in discussions on Monday.

AT&T offered to sell CNN, the sources said. AT&T denied that version of events of the meeting with Justice Department officials.

“I have never offered to sell CNN and have no intention of doing so,” AT&T Chief Executive Randall Stephenson, said in a statement on Wednesday. Stephenson is set to appear at an event in New York City on Thursday and will likely face questions about the deal.

Reports that the Justice Department is pushing for significant asset sales and conflicting reports of its discussions with AT&T cast new doubt on the deal on Wednesday. Shares of Time Warner closed down 6.5 percent at $88.50.

The dispute is the latest twist in a deal which took on broader political significance immediately after its inception in October 2016. U.S. President Donald Trump, a frequent critic of CNN, attacked the deal on the campaign trail last year, vowing that as president his Justice Department would block it. He has not commented on the transaction since taking office in January.

In a statement, White House spokesman Raj Shah said: “The president did not speak with the attorney general about this matter, and no White House official was authorized to speak with the Department of Justice on this matter.”

The head of the Justice Department’s antitrust division, Makan Delrahim, said in a statement: “I have never been instructed by the White House on this or any other transaction under review by the antitrust division.”

AT&T wants to buy Time Warner, which owns the premium channel HBO and movie studio Warner Bros along with Turner Broadcasting, so it can bundle mobile service with video entertainment and take online advertising from Facebook Inc and Alphabet Inc.

Both companies have struggled to keep younger viewers from flocking to online services like Netflix Inc and Amazon.com Inc’s Prime Video.

CHANGE OF COURSE

Until recently the vertical deal - which in theory should not reduce competition among the two companies’ direct rivals - was considered by antitrust experts as likely to be approved with no major concessions.

But regulators’ desire for asset sales will complicate negotiations. AT&T said earlier on Wednesday it was now uncertain when the deal would be completed. It had previously said the acquisition would close by the end of this year.

The discussion of a potential sale of CNN has politicized the situation. Trump has repeatedly tangled with CNN, calling the network’s coverage “fake news.”

Senator Al Franken, a Minnesota Democrat, said on Wednesday he opposed the mega-merger but was also worried about political implications of any divestiture of CNN.

“I am deeply concerned with the notion that the Justice Department may be pressuring the companies to consider spinning off CNN’s parent company Turner Broadcasting as a path forward toward approval of the acquisition, given the president’s repeated public complaints about CNN’s coverage of him,” Franken said. “Any indication that this administration is using its power to weaken media organizations it doesn’t like would be a profoundly disturbing development.”

On Sunday, White House adviser Kellyanne Conway told CNN that the White House would not interfere with the merger review.

There are many ways to resolve concerns about the deal, a Justice official said on Wednesday, adding that no decision had been made and that conversations with AT&T were continuing.

AT&T is prepared to fight any divestitures required to win regulatory approval of the deal, according to sources familiar with the matter.

The Justice Department could file a lawsuit as early as this month to challenge the deal, sources familiar with the negotiations told Reuters.

TOO MUCH POWER

The deal is opposed by an array of consumer groups and smaller television networks on the grounds that it would give AT&T too much power over the content it would distribute to its wireless customers.

The new concessions suggest the Justice Department’s antitrust chief Delrahim has changed his view of AT&T’s plan to buy Time Warner, since giving an interview in 2016 where he declared it not “a major antitrust problem.”

Delrahim was subsequently nominated by U.S. President Donald Trump to head the Justice Department’s antitrust division and was confirmed in September. A further sticking point in discussions is the length of time that the U.S. government wants to impose conditions on what AT&T can and cannot do after a deal. Two people briefed on the talks told Reuters the government has sought as long as 10 years for such conditions while AT&T has pressed for a shorter period.

AT&T also said it would invest an additional $1 billion in the United States next year if Trump signed into law the provisions in the current House of Representatives tax bill.

“By immediately lowering the corporate tax rate to 20 percent, this bill will stimulate investment, job creation and economic growth in the United States,” said Randall Stephenson, AT&T chief executive.



Reporting by David Shepardson, Diane Bartz and Jeff Mason in Washington, Greg Roumeliotis, Jessica Toonkel and Anjali Athavaley in New York, and Arjun Panchadar in Bengaluru; Editing by Chris Sanders and Bill Rigby


Speaker Ryan opens door to delayed corporate tax cut

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WASHINGTON (Reuters) - U.S. House of Representatives Speaker Paul Ryan on Wednesday left the door open to a possible delay in implementing a huge corporate tax cut, following a media report that his fellow Republicans in the Senate are exploring the option.

Republicans in Congress are working on separate plans to give the U.S. tax code its biggest overhaul since the 1980s. President Donald Trump and his House allies have proposed slashing the rate companies pay to 20 percent from 35 percent.

But the Washington Post reported on Tuesday that the Senate could include a one-year delay in its version of the bill to make it easier to comply with the chamber’s rules that aim to limit any legislation’s impact on the U.S. deficit.

Wall Street, where investors remain focused on the tax bill’s chances of passage, was trading largely flat on Wednesday after opening lower as bank stocks came under pressure from a near-flat Treasury yield curve.

Asked if House Republicans would consider a delay in implementing the lower corporate rate, Ryan told Fox News Radio on Wednesday:

“So what economists tell us ... is that you still get very fast economic growth and you actually are encouraging companies to spend on factories and plants and equipment and hiring people sooner with the phase-in.”

Ryan, the highest ranking Republican on Capitol Hill and a former chairman of the House’s tax-writing panel, said both chambers of Congress would work on their own tax cut package and iron out the differences in a conference committee.

“The Senate is still focused on getting an economic growth plan and the House does as well. So at the end of the day, this is all to the good, it’s just a debate about how good it gets,” he said.

The tax overhaul is a priority for Trump, who says it will boost economic growth and create jobs. Republicans have yet to score a major legislative accomplishment since he took office in January, even though they control Congress as well as the White House.

Democrats have blasted the tax proposals as a give-away to corporations and the rich.

Asked if the corporate tax cut would be delayed by a year, Senator John Thune, a Republican member of the Senate Finance Committee, said that part of the tax plan was “still a work in progress.” Two other senators on the committee said as far as they knew there was no definite decision on a one-year delay.

Financial markets are nervous about the potential outcome of lawmakers’ plans to cut corporate taxes, and whether Congress can pass the overhaul quickly.

“I do think there’s disappointment with Republicans kicking the tax bill around. And that’s why we’re seeing this meandering in stocks today. Some of the things leaking out are not encouraging. It causes pause, and money to stay on the sidelines,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

WARNING TO REPUBLICANS

The latest version of the House Republicans’ tax bill would add $1.7 trillion to the federal budget deficit over 10 years, more than the $1.5 trillion they initially announced, according to the nonpartisan Congressional Budget Office, which tallies the costs of legislation.

The CBO’s assessment gives more impetus to the Senate’s bill.

The House bill slashes tax rates for large corporations, small businesses and wealthy Americans, while sharply reducing or eliminating tax breaks that benefit many middle-class Americans, including deductions for state and local tax (SALT) payments, college tuition and home mortgage interest.

Senate Democratic Leader Chuck Schumer said victories for Democrats in state elections on Tuesday should be a warning to Republicans, especially in parts of the country where income and property taxes are generally higher.

Some analysts have said that residents of New York and New Jersey would be among those hardest hit by the changes to deductions.

Voters in New Jersey elected a Democratic governor on Tuesday, ending eight years of Republican rule, while Virginia elected a Democrat to succeed its outgoing Democratic governor.

“The Republicans should look at the elections last night, and it should be a giant stop sign for their tax bill. Where did they get clobbered? In the suburbs. Where does the tax bill clobber middle-class and upper middle-class people? In the suburbs,” Schumer said.

There are enough Republicans from high-tax states in the House to torpedo the tax bill, given that Democrats are likely to be united in their opposition to it. Republicans, who have a slim 52-48 majority in the Senate, also may need support from Democrats to pass their version of the bill.

Thune told reporters this week’s state elections were a wake-up call for his party in Congress.

“It does speak to the need for us to get accomplishments ... think right now there’s a general frustration in the country that even though we’ve gotten some things done on our agenda, that some of the big-ticket items remain unfinished.”

Republicans have so far failed to live up to campaign promises to repeal the Obamacare healthcare law, or pass a massive infrastructure bill.

One provision in the Senate tax bill that may differ from the House’s version is related to the estate tax.

Several Republican senators, including Susan Collins of Maine, have said they do not see a reason to repeal that tax, which only applies to a person’s estate worth more than $5.49 million, or $10.98 million for married couples.

Republicans have complained that the tax, which can be as high as 40 percent, is a form of double taxation that hits small businesses and farms hard.

Collins, a key moderate whose vote will likely be needed to pass the Republican tax legislation, demurred when asked whether the Senate bill will leave the estate tax in place.

“Until it is released I’ve been asked not to comment on the specifics, but it’s certainly true that I expressed reservations about having complete repeal of the estate tax,” Collins told reporters.


Additional reporting by Doina Chiacu, Katanga Johnson and Amanda Becker; Writing by Alistair Bell; Editing by Paul Simao

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