AT&T on Saturday announced a deal worth $108.7 billion for Time Warner that would create a powerhouse with control over a vast array of media and entertainment assets and the means to deliver them.
The stock-and-cash deal values Time Warner- with HBO, CNN and Warner Bros studios, at more than $85 billion, and calls for AT&T to absorb the media group's debt.
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," a statement from 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 chairman and chief executive Randall Stephenson.
The tie-up makes AT&T a strong rival to Comcast, which owns NBC Universal, and aims to counter the growing threat from online rivals such as Netflix and Amazon.
It also positions AT&T, which recently acquired satellite TV group Direc TV, 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.
But the deal is likely to face tough scrutiny from antitrust regulators, and Republican presidential nominee Donald Trump said he would block it if elected.
Even before the announcement, US consumer groups called for regulators to consider the impact of the tie-up.
Trump says he would block AT&T-Time Warner deal https://t.co/uTEfJTiVV2 ?
— Wall Street Journal (@WSJ) October 23, 2016
AT&T Q3 Revenue Miss Highlights Urgency Behind Time Warner Deal https://t.co/zC6aUVtVCV — Variety (@Variety) October 23, 2016
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 expensive cable "bundles," with many opting for online services and on-demand viewing.
"Time Warner Chairman and CEO Jeff Bewkes and his senior management team can see where the entire legacy media world is headed: secular decline," he said in a blog post.
"If Time Warner and its management team were confident in the future of the media sector, particularly the cable network industry, they would not be selling now," he added. "The harsh reality is that the legacy cable network business has been overearning for decades with an unvirtuous circle of pain about to begin."
AT&T's logic for buying Time Warner: "The future of video is mobile and the future of mobile is video..." https://t.co/gNIdyLRLWb
— Brian Stelter (@brianstelter) October 23, 2016
AT&T is the second-largest US wireless carrier and 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.
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 DirectTV in 2015.
[caption id="attachment_24048" align="aligncenter" width="800"]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," and 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," 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 antitrust regulators, and Republican presidential nominee Donald Trump said he would block it if elected.
Even before the announcement, US consumer groups called for regulators to consider the impact of the tie-up.
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