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AT&T, Time Warner Shares Drop as Justice Department Weighs Antitrust Suit to Block Merger

Regulators are preparing for a lawsuit against the $85 billion merger if they can’t come to a settlement

Shares in AT&T and Time Warner dropped Thursday after the Wall Street Journal reported that the U.S. Justice Department is planning for a possible antitrust lawsuit that would seek to prevent the media giant’s planned $85 billion merger if the companies and government can’t agree on a settlement.

Regulators are preparing for the lawsuit on a parallel track to their negotiations with the companies on a settlement that would give them the government’s blessing for the deal in exchange for certain conditions, the Journal wrote.

Such negotiations are not uncommon in big media mergers — regulators imposed numerous conditions on Comcast when it acquired NBCUniversal in 2011, such as mandating the company make NBC’s channels available to its cable competitors.

Both companies have repeatedly maintained that they expect the deal to close before the end of the year. But with it being more than a year since the mega-merger was announced, investors expressed concern about Thursday’s report, sending AT&T’s stock down 1 percent and shares of Time Warner down 4 percent.

A Time Warner spokesperson declined to comment. The Justice Department did not immediately respond to TheWrap’s request for comment.

“When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios,” an AT&T spokesperson said in a statement. “For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won’t comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception.”

If approved, the merger between AT&T and Time Warner would be the biggest media and entertainment deal since AOL’s ill-fated union with Time Warner 17 years ago. The new company would combine assets including AT&T’s wireless business and DirecTV with the Warner Bros. studio, HBO and CNN.

Tony Maglio contributed reporting to this article.