Update: And it is confirmed. AT&T has announced that it is indeed acquiring Time Warner in a deal that will dwarf any other acquisitions that have taken place this year. The US based mobile operator will be doling out $85.4 billion in cash and stock, which amounts to somewhere around $107.5 per share. This is in keeping with rumors that both the companies had agreed upon a $110 per share price.It is also significantly larger than the $85-a-share offer Time Warner received back in 2014 from 21st Century Fox. So as it turns out, it paid well to wait.
Speaking on the topic, Randall Stephenson, AT&T chairman and CEO 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. Premium content always wins. 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. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that.
This also gives us a look at AT&T’s ambitious plans for the future. By acquiring Time Warner, the company will have access to some of the most popular content produced. By changing the rules of content delivery, AT&T may be able to increase the reach of content, while also making its own services all the more popular.
With great content, you can build truly differentiated video services, whether it’s traditional TV, OTT or mobile. Our TV, mobile and broadband distribution and direct customer relationships provide unique insights from which we can offer addressable advertising and better tailor content. It’s an integrated approach and we believe it’s the model that wins over time
Meanwhile. the deal is not final yet. Although AT&T probably made this announcement after making sure that the terms of the deal were acceptable to the folks over at Time Warner, however, it will have to pass regulator scrutiny. Regulators have been known to cancel or stall deals of large magnitudes, and considering the size of this deal, along with the fact that it is coming around a regime change in the US, make things slightly harder.
While Donald Trump said yesterday that he will block the deal if elected, Democratic Hillary Clinton is not a fan of big mergers either. However, AT&T remains confident of closing the deal before the year end.
Previously: According to various sources and of course, the rumor mill, AT&T and Time Warner group may be considering a potential Merger. Apparently, executives of both the companies have been in talks to discuss a merger. Time Warner and AT&T are both mammoth entities in their different sectors and a merger between these two could well be the deal of the century.
According to CNBC, AT&T has agreed in principle, to pay $85 Billion for acquiring Time Warner. While most other sources are not commenting upon the monetary value of the deal at this point, Time Warner does have a market capitalization of well over $70 Billion. That said, the deal could actually have a value in the neighborhood of the $85 Billion figure.
AT&T is one of the world’s largest communication services. It offers phones, wireless and broadband to customers across the world. The company has been attempting to move into media since last year, when it acquired satellite TV provider DirecTV for $48.5 billion. That acquisition gave it control of a large number of Television subscribers.
However, with the onset of cheaper streaming services that can offer content tailored to your taste, the regular television could well be on its way out. That said, AT&T could be looking to ramp up its presence and turn into a true media mammoth by boosting its media arm with Time Warner.
Time Warner of course, is a group that scarcely needs an introduction. The company own a huge number of digital media assets including New Line Cinema, HBO, Turner Broadcasting System, The CW Television Network, Warner Bros., Cartoon Network, Boomerang, Adult Swim, CNN, DC Comics, Warner Bros. Animation, Cartoon Network Studios, Hanna-Barbera, Esporte Interativo, Castle Rock Entertainment and Warner Bros.
If none of the above managed to particularly impress you, well, Time Warner also owns The Game Of Thrones through HBO.
AT&T of course has an association with Time Warner. The former acts as a distributer for quite a lot of the latter’s content through its channels. However, that is not enough and AT&T now wants to own the group as well. It would go perfectly with the current trend of creating/acquiring and owning media empires amongst communication giants. For example, Comcast acquired NBC Universal for around $30 billion in 2009. Similarly, Verizon — a longstanding AT&T rival — acquired AOL last year for $4.4 billion and is in the middle of adding Yahoo to its portfolio of media companies as well.
So yes, AT&T does need a merger with a media house to stay on track alongside its peers. With most of the properties worth taking already swallowed up by others, AT&T decided to go after one of the largest media and entertainment companies. There is Disney too of course, but it has a market valuation of well over $150 Billion as opposed to Time Warner’s $70 Billion or so — and even the Time Warner acquisition (if and when it takes place) will leave AT&T with a debt of over $150 Billion.
Meanwhile, even assuming that both the entities come to a mutually acceptable agreement, the merger will still have to pass regulator scrutiny before it can actually take place. And regulators have lately been wary of consolidation causing and competition reducing deals between mega corporations. Comcast’s attempts to buy Time Cable Inc for example, was blocked all thanks to regulators.
And the fact that its time for a government change in the US, is not likely to do the companies any favor. New regulators will be coming in and who knows what stance they will take towards a deal of this magnitude. Hillary Clinton for example, has already promised to take a tougher stance on consolidation.
We hope to have more news on the topic come next week. Meanwhile, Time Warner’s shares gained 7.8 percent on Friday and jumped up to $89.48. On the other hand, AT&T declined by 3 percent to drop to $37.49.