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|AT&T announced plans last year to purchase Time Warner to create a juggernaut with more than 142 million mobile subscribers and a major player in pay TV broadcasting via DirecTV. (AFP/SAUL LOEB, STAN HONDA)|
The Justice Department, which is reviewing the US$85.4 billion deal, recently presented the options to the companies, the source added, confirming reports from US media and the Financial Times.
The move is likely to draw criticism and could be seen as political payback, since US President Donald Trump has repeatedly criticised CNN for its coverage of him, calling it "fake news."
The source said the companies were told that Time Warner would need to sell off Turner, the television division that includes CNN. But AT&T has said it doesn't want to lose the all-news network in the deal.
The other option would be for AT&T to sell its DirectTV division, the source said.
On Wall Street, Time Warner fell 6.5 per cent to close at US$88.50, while AT&T shares jumped 1.1 per cent to close at US$33.44.
AT&T's chairman and CEO Randall Stephenson said in a statement on Wednesday that he wanted to "set the record straight."
"Throughout this process, I have never offered to sell CNN and have no intention of doing so," he said.
The Department of Justice said it does not comment on pending investigations, but that it was "committed to carrying out its duties in accordance with the laws and the facts."
The companies had been planning to finalise the deal by the end of the year, and just last week AT&T said it was confident it would win approval for the deal since it does not involve direct competitors.
But John Stephens, AT&T's chief financial officer, told a conference with investors in New York earlier Wednesday that the date to finalize the merger was now "uncertain" because of ongoing negotiations with the government authorities.
AT&T announced plans last year to purchase Time Warner to create a juggernaut with more than 142 million mobile subscribers and a major player in pay TV broadcasting via DirecTV.
Time Warner also includes a media group with popular content that includes sports, movies and television series.