AT&T DEAL FOR WARNER:
AT&T has agreed to a blockbuster $85 billion-plus deal to acquire Time Warner, a move that singlehandedly turns America’s most storied telecom company into a content powerhouse and one of the most prominent TV, film and video-game producers in the world. Confirmation of the deal was announced Saturday night.
AT&T has agreed to a blockbuster deal for $85.4 billion to acquire Time Warner, a move that would singlehandedly turn America’s most storied telecom company into a content powerhouse and one of the most prominent TV, film and video game producers in the world.
The agreement was confirmed by the telecom giant late Saturday in a decidedly old-school news release.
“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,” AT&T CEO Randall Stephenson said in the statement.
The merger casts a spotlight on a defining movement for the giants of modern tech: their accelerating conquest of media in an increasingly unbundled world. AT&T and Time Warner did not respond to requests for comment.
AT&T, Amazon, Google and Verizon have all surged into original content, believing it offers them a lucrative foothold into viewers’ pockets and living rooms and a bulwark against the rapidly changing web and cable television landscapes.
But the consolidation of media into a fewer empires has also renewed concerns over the fairness and freedom of tomorrow’s entertainment.
“You have a big distributor owning some of the largest networks. Is everyone going to have equal access to those networks?” said Eric Handler, a media and entertainment analyst for MKM Partners.
The deal would likely attract heavy regulatory scrutiny over its potential to stifle media competition or suppress innovation.
Indeed, Donald Trump, the GOP presidential nominee, said Saturday that if elected he would block the merger.
“It’s too much concentration of power in the hands of too few,” Trump said at a speech in Gettysburg, Pa.
Still, Time Warner Chairman and CEO Jeff Bewkes seemed confident Saturday, noting, “This is a great day for Time Warner and its shareholders.”
News of the merger follows a wave of dealmaking and consolidation that has been transforming viewers’ leisure time and media spending, including Comcast’s purchase of NBCUniversal in 2011.
For years, AT&T has pushed content to living room televisions or cell phones but didn’t create the content itself. Its marriage with Time Warner would give AT&T prime control and potential influence over some of the biggest names in TV, news and film, including CNN, HBO and Warner Bros., the movie studio behind the “Harry Potter” and “Batman” films that is rivaled only by Disney and Universal for box office supremacy.
Owning media that keeps people engaged through the life of a weekly TV series, or every day through a video game, would give a company such as AT&T an exclusive hook to ensure subscribers keep coming back.
“Being able to own content that is unique to them allows them to ... pay back those investments they made,” said Robin Diedrich, a senior analyst with Edward Jones.
But John Bergmayer, senior counsel at the Washington technology advocacy group Public Knowledge, also said the deal poses a major threat to consumer choice. The merged company could crowd out or block alternative programming on its TV service, give preferential treatment to its own content on its broadband internet service or impose higher costs for TV competitors.
“This ... raises major challenges for consumers, subscribers and competitors,” Jeff Chester, executive director of Center for Digital Democracy, said in a statement Saturday.
The AT&T-Time Warner deal presages a broader transformation of the tech and entertainment world. TV conglomerates Viacom and CBS are also considering mergers in the coming months.
“When a big deal like this happens, more deals tend to happen,” analysts with New Street Research told investors Friday. “It is a good time to be an asset ‘in play.’ ”
Time Warner represents a clean get for any deeppocketed company seeking to greatly expand its empire. The company had sweetened its future prospects by carving off low-growth divisions, such as AOL and its magazine business, and spinning off its cable TV provider, Time Warner Cable. And much of its content has remained popular even as the traditional entertainment model has begun to unravel.