AT&T re­port­edly in talks to buy Time Warner

Daily Freeman (Kingston, NY) - - FRONT PAGE - By Tali Arbel And Bernard Con­don

Sev­eral re­ports cit­ing un­named sources said AT&T is in ad­vanced talks to buy Time Warner for $80 bil­lion or more.

Grab some pop­corn — AT&T wants to take you to the movies.

AT&T is buy­ing Time Warner, owner of the Warner Bros. movie stu­dio as well as HBO and CNN, for $85.4 bil­lion, in a deal that could shake up the me­dia land­scape.

The merger com­bines a tele­com gi­ant that owns a lead­ing cell­phone busi­ness, DirecTV and in­ter­net ser­vice with the com­pany be­hind some of the world’s most pop­u­lar en­ter­tain­ment. It’s the lat­est tie-up be­tween the own­ers of dig­i­tal dis­tri­bu­tion net­works — think ca­ble and phone com­pa­nies — and en­ter­tain­ment and news providers, one aimed at shoring up busi­nesses up­ended by the in­ter­net.

The deal would make Time Warner the tar­get of the two largest me­di­a­com­pany ac­qui­si­tions on record, ac­cord­ing to Dealogic. The high­est was AOL’s dis­as­trous $94 bil­lion ac­qui­si­tion of Time Warner at the end of the dot-com boom.

Reg­u­la­tors would have to sign off on the deal. Shares of AT&T, as is typ­i­cal of ac­quir­ers in large deals, fell on the re­ports, end­ing Fri­day down 3 per­cent.

Com­pa­nies that pro­vide phone and in­ter­net con­nec­tions are in­vest­ing in me­dia to find new rev­enue sources and en­sure they don’t get rel­e­gated to be­ing just “dumb pipes.” Ver­i­zon bought AOL last year and has now pro­posed a deal for Ya­hoo to build a dig­i­tal-ad busi­ness. Com­cast bought NBCUniver­sal in 2011.

AT&T has been ac­tive, too.

Af­ter its at­tempt to buy wire­less com­peti­tor T-Mo­bile was scrapped in 2011 fol­low­ing op­po­si­tion from reg­u­la­tors, the com­pany dou­bled down on tele­vi­sion by pur­chas­ing satel­lite-TV com­pany DirecTV for $48.5 bil­lion. AT&T is ex­pected to of­fer a stream­ing TV pack­age, DirecTV Now, by the end of the year, aimed at peo­ple who have dropped their ca­ble sub­scrip­tions or never had one.

The pres­sure on AT&T has been in­tense.

The ven­er­a­ble phone com­pany with roots back to Alexan­der Gra­ham Bell has to con­tend with slow­ing growth in wire­less ser­vices, given that most Amer­i­cans al­ready have smart­phones, and it faces new com­peti­tors for that busi­ness from ca­ble com­pa­nies. Com­cast plans to launch a cell­phone ser­vice for its cus­tomers next year.

Buy­ing Time Warner may be “a good de­fen­sive move” against Com­cast as the ca­ble gi­ant con­tin­ues stretch­ing into new busi­nesses, New Street Re­search an­a­lyst Jonathan Chap­lin said in a Fri­day note. Com­cast bought movie stu­dio DreamWorks An­i­ma­tion in Au­gust.

Sev­eral an­a­lysts say the AT&T deal will likely face op­po­si­tion from Wash­ing­ton.

John Bergmayer of the pub­lic-in­ter­est group Pub­lic Knowl­edge, which of­ten crit­i­cizes me­dia con­sol­i­da­tion, warned of harm to con­sumers.

For ex­am­ple, he said AT&T might refuse to carry chan­nels that could com­pete with Time Warner’s net­works. Or on its phones, AT&T could let wire­less cus­tomers watch TV and movies from Time Warner with­out us­ing their data, in turn dis­fa­vor­ing video from other providers.

If the deal is ap­proved, reg­u­la­tory con­di­tions could limit AT&T’s abil­ity to fa­vor Time Warner video or give AT&T cus­tomers bet­ter deals. It would be one of the largest me­dia merg­ers since Time Warner’s dis­as­trous sale to AOL in 2000.

Time Warner, mean­while, has moved to counter the threat that slid­ing ca­ble sub­scrip­tions poses to its busi­ness. Among other things, it launched a stream­ing ver­sion of HBO for cord-cut­ters and, along­side an in­vest­ment in in­ter­net TV provider Hulu, added its net­works to Hulu’s live-TV ser­vice that’s ex­pected next year.

Be­fore re­ports last week of a pos­si­ble deal with AT&T, Time Warner’s stock had risen 23 per­cent this year, out­pac­ing the Stan­dard & Poor’s 500.


In this May 26, 2015, photo, pedes­tri­ans walk by an en­trance to the Time Warner Cen­ter in New York. AT&T is buy­ing Time Warner for $85.4 bil­lion.


This May 14, 2014, photo shows an AT&T logo on a store in Ded­ham, Mass.

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