AT&T and Time Warner in mega-deal
AT&T has unveiled a mega-deal for Time Warner that will transform the telecom giant into a media-entertainment powerhouse positioned for a sector facing major changes.
The stock-and-cash deal is valued at US$108.7 billion including debt, and gives a value of $84.5 billion to Time Warner – a major name in the sector that includes the Warner Bros studios in Hollywood and an array of TV assets such as HBO and CNN.
It would give the big US telecom firm “the world’s best premium content with the networks to deliver it to every screen, however customers want it”, the companies said.
“This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers,” said AT&T chair Randall Stephenson.
The tie-up, which could face tough anti-trust scrutiny, makes AT&T a strong rival to Comcast, which owns Time Warner rival NBCUniversal, and aims to counter the growing threat from online services such as Netflix and Amazon.
It also positions AT&T against longtime telecom rival Verizon, which has acquired internet group AOL and is in the process of buying Yahoo, and against new delivery platforms expected from Google and others.
The tie-up includes the vast Time Warner film library, including the Harry Potter franchise, and TV operations that include HBO’s popular Game of Thrones, it would allow AT&T to deliver the content to its fibre TV subscribers and also through its newly acquired DirecTV satellite service and mobile devices.
“Premium content always wins,” Mr Stephenson said. “It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We’ll have the world’s best premium content with the networks to deliver it to every screen.”
But the deal is likely to face tough scrutiny from anti-trust regulators, and Republican presidential nominee Donald Trump said he would block it if elected.
Even before the announcement, US consumer groups had called for regulators to consider the impact of the tie-up.
But some analysts said the deal makes sense given the changing media landscape.
Richard Greenfield of BTIG Research said the sector can no longer count on consumers watching “linear” TV and subscribing to cable “bundles,” with many opting for online services and on-demand viewing.
AT&T is the second-largest US wireless carrier and the third-largest cable TV provider in the United States, while Time Warner controls a valuable stable of entertainment content suppliers, including Warner Bros film and TV studios, the HBO television production group, cable news giant CNN, and the TNT and TBS cable channels.
The deal would add fresh turmoil to a sector facing challenges from technology and could spur other deals among major players like Disney and 21st Century Fox. It comes with broadcast group CBS and film giant Viacom eyeing plans to re-merge a group that split a decade ago.
AT&T had $147 billion in revenues in 2015 while Time Warner reported $28 billion.
AT&T has pursued an aggressive expansion, paying almost $50 billion to buy satellite television provider DirecTV in 2015. –
The AT&T headquarters in Arlington, Virginia. The tie-up with Time Warner will transform the telecom giant into a media-entertainment powerhouse.