AT&T reportedly in talks to buy Time Warner
Many communications giants trying to stay viable as consumers look to cheaper, digital alternatives
AT&T is said to be in advanced talks to acquire Time Warner, which could be the largest deal in the United States this year. But the transaction could fall apart on financial and antitrust concerns.
For companies that sell consumers cable and internet service, merely distributing entertainment and programs is not enough. They want to own them.
Media conglomerate Time Warner, which owns HBO, CNN and the movie studio Warner Bros., has long been among the most prized takeover targets.
It is being courted by Dallas-based AT&T, a telecommunications giant that lacks ownership of any of the shows and videos it delivers through its various businesses. The two are in advanced talks for AT&T to acquire New York-based Time Warner, and a deal may be announced as early as Monday, according to people with knowledge of the discussions.
A merger would come at a pivotal time in the communications industry, where the giants are scrambling to create entertainment empires to maintain competitiveness as consumers increasingly embrace cheaper
digital alternatives.
More combinations, possibly involving Comcast, Viacom or Apple, could reshape the media landscape. Already, the family that controls Viacom and CBS has asked their boards to study a possible merger, a deal that could happen before the end of the year.
The Wall Street Journal reported that Apple approached Time Warner about pursuing a combination a few months ago, and though the discussions didn’t progress beyond a preliminary stage, Apple is monitoring the media giant’s talks with AT&T.
Regulators have been wary of allowing combinations of businesses that could create less competition and thwart innovation by startups, and a tie-up of AT&T and Time Warner could raise concerns. It is a bold move in an election year that will usher in a new administration and a fresh set of regulators.
Time Warner is asking AT&T to pay more than $90 a share in the deal, said the people who asked not to be named because the details are still private.
At a minimum, that amount, which would put the price around $70 billion, would make this deal the largest of the year, surpassing Bayer’s $56 billion takeover of Monsanto.
The transaction is not yet final and may fall apart or get delayed, the people with knowledge of the dis- cussions said. Representatives from Time Warner and AT&T declined to comment.
A combination with AT&T would be an aboutface from Time Warner’s strategy just seven years ago. The company divested Time Warner Cable in 2009, and Time in 2014, in order to focus on developing programs and entertainment.
But since then, other cable providers have teamed up with media companies. Comcast agreed to acquire NBC Universal from General Electric Co. for about $30 billion in 2009. Verizon acquired the aging internet property AOL last year for $4.4 billion and signed a $4.8 billion deal to acquire the core business of another older internet company, Yahoo, earlier this year.
The terms of the AT&T transaction will most likely be higher than the $85-ashare price that 21st Century Fox was willing to pay for Time Warner two years ago. Time Warner spurned the proposal, saying it could create more value for shareholders by staying independent, and 21st Century Fox, led by Rupert Murdoch, withdrew the bid.
AT&T’s interest in Time Warner comes more than two years after it announced a $48.5 billion deal for DirecTV, the nation’s largest satellite television provider. The merger created the country’s largest television distributor with about 26 million subscribers, surpassing Comcast.