By Tom Huddleston Jr.
November 8, 2017

AT&T’s $85.4 billion planned Time Warner acquisition would be a massive transaction with the potential to remake the media and telecommunications industries, but the deal now faces some big obstacles.

At a Wells Fargo media and telecom conference on Wednesday morning, AT&T chief financial officer John Stephens said that closing the mega-deal for Time Warner “is now uncertain” even as he declined to elaborate on the company’s ongoing discussions with the U.S. Department of Justice about securing regulatory approval for the transaction.

Meanwhile, multiple news outlets reported on Wednesday afternoon that anonymous sources with knowledge of the regulatory process have said that the Justice Department has told AT&T that the telecom giant would need to sell off part of Time Warner’s vast media portfolio in order to win antitrust approval for the deal. The New York Times reports that regulators may want AT&T to divest either Time Warner’s Turner Broadcasting unit, which includes CNN and other cable networks, or satellite television provider DirecTV.

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However, the Financial Times reported that the Justice Department’s primary demand is for the sale of CNN, a leading cable news network that has frequently drawn the ire of President Donald Trump, who refers to the network and its journalists as “fake news” on a regular basis. Trump voiced his opposition to the AT&T-Time Warner deal while campaigning for the White House, calling the deal “too much concentration of power” between Time Warner’s media assets (which also include HBO and Warner Bros. movie studios) and AT&T’s huge wireless and broadband distribution network. But, the president’s oft-stated animus toward CNN and its reporting could also be seen as an obstacle to the deal’s completion should the Trump administration’s Justice Department ultimately opt to challenge the acquisition.

AT&T CEO Randall Stephenson made it clear on Wednesday that the company has no intention of unloading CNN. “Until now, we’ve never commented on our discussions with the DOJ. But given DOJ’s statement this afternoon, it’s important to set the record straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so,” Stephenson said in a statement.

Politico reports that sources say the Justice Department has not explicitly demanded that AT&T sell CNN along with the rest of Turner, but that the company is interpreting regulators’ request for “structural remedies” as pressure to shed the cable news network. Last week, the Wall Street Journal reported that the Justice Department is preparing a lawsuit to challenge the deal in case an agreement can’t be reached between the government and the companies.

Should the Justice Department move to block the deal, it would come as something of a surprise, especially considering that the Justice Department’s top antitrust regulator, Makan Delrahim, even said earlier this year that he did not think the deal presented a “major antitrust problem” due to the fact that neither of the two companies directly competes in the same spaces. And, while AT&T last month said it extended by a “short period” its deadline to close the planned deal, the transaction has already won regulatory approval in other countries such as Brazil, Chile, and Mexico without the need to sell any assets.

(Note: Time Warner is the former owner of Fortune‘s parent company, Time Inc., which was spun off in 2014.)

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