Update: AT&T CEO and chairman Randall Stephenson said he has "no intention" of selling CNN despite the Justice Department's request. Read more here.
Time Warner shares were down 6 percent Wednesday after the Justice Department demanded that CNN's parent be sold before a merger with AT&T can be approved.
CNBC confirmed the Justice Department's demand that Turner Broadcasting or DirecTV be sold before approval of the $85 billion merger.
AT&T's stock price was up slightly.
Earlier Wednesday, AT&T's chief financial officer John Stephens said the timing of the deal was "now uncertain."
President Donald Trump has repeatedly criticized CNN as fake news in the past year.
Stephens spoke about the negotiations with the government at a conference Wednesday morning.
"We are in active discussions with the [Department of Justice]. Those are continuing on. I can't comment on those discussions, but with those discussions, I can now say that the timing of the closing of the deal is now uncertain," he said, according to a FactSet transcript. "With regards to the transaction, everything continues as we've expressed in the past."
The AT&T executive spoke at the Wells Fargo Media & Telecom Conference in New York. The company previously guided for the deal to close by the end of 2017.
Stephens noted the AT&T acquisition of Time Warner is a "vertical integration" merger across industries. He cited how the government has not blocked a "vertical" deal in more than 40 years.
AT&T announced an agreement to acquire Time Warner in October 2016 for a cash and stock deal valued at more than $85 billion.
Time Warner shares dropped 4 percent on Nov. 2 after The Wall Street Journal reported that the Justice Department's antitrust division is preparing for litigation in case it decides to sue to block the deal.
Time Warner declined comment on the development.
The FT first reported the Justice Department told AT&T it must sell CNN and later the New York Times reported either CNN or DirecTV must be sold.
-CNBC's Andrew Ross Sorkin contributed to this report.