AT&T and Time Warner in mega-deal

The Myanmar Times - - Business -

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. –

Photo: AFP

The AT&T head­quar­ters in Ar­ling­ton, Vir­ginia. The tie-up with Time Warner will trans­form the tele­com gi­ant into a me­dia-en­ter­tain­ment pow­er­house.

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