US competition regulators and AT&T are in a dispute over whether the wireless carrier would be required to sell Time Warner's CNN cable network as a condition of approval of its deal to buy the media company.
The US Department of Justice has demanded significant asset sales in order to approve the $85.4 billion deal, sources told Reuters.
The department had 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. But 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's chief executive Randall Stephenson, said in a statement.
Reports that the US 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.
The dispute is the latest twist in a deal which took on broader political significance immediately after its inception in October 2016.
US 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.
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 and Alphabet.
Both companies have struggled to keep younger viewers from flocking to online services like Netflix and Amazon.com Prime Video.
Until recently the deal - which in theory should not reduce competition among the two companies' direct rivals - was considered by competition experts as likely to be approved with no major concessions.
But regulators' desire for asset sales will complicate negotiations.
AT&T said yesterday that 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 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.