During an investor conference today, AT&T CFO John Stephens said that the company was in active discussions with the DOJ, which he couldn't comment on, though he added, "But with those discussions I can now say that the timing of the closing of the deal is now uncertain." According to a Financial Times source with knowledge of the discussions, Time Warner is being asked to divest itself of CNN, one of two major demands, which the source told the Financial Times were "completely unreasonable" and "a complete perversion of the guidelines of the law." Additionally, the New York Times is reporting that the sale of CNN is part of a larger request to sell Turner Broadcasting, which includes CNN among its numerous network holdings. The other option, according to the NYT, is for AT&T to dump DirecTV.

It's very likely that neither option will be acceptable to AT&T, which plans to buy Time Warner for $85.4 billion, and if the DOJ decides to turn those requests into formal requirements for approval, AT&T and Time Warner will probably challenge the agency and take the matter to court. One of the reasons why the DOJ's demands and threats to bring an antitrust case against the deal are so surprising is because neither company has much overlap in its holdings. The proposed deal is a vertical merger, not a consolidation of previously competing companies. At the conference today, Stephens said that a "vertical merger like this hasn't been blocked for over 40 years."

It's now unclear when the acquisition will be finalized or whether the DOJ discussions will be upgraded to a lawsuit, but it's very unlikely that the deal will be wrapped up before next year.

Update: Reuters reports that AT&T CEO Randall Stephenson didn't offer to sell CNN to gain DOJ approval and doesn't intend to do so. Of course, that doesn't mean the Justice Department didn't ask.