AT&T Is Buying Time Warner
AT&T has reached an agreement to buy Time Warner for $85.4 billion a deal that would transform the company to a media giant. AT&T agreed to pay $105.50 a share, evenly split between stocks and cash. The offer is an improved one from a prior one (2014) by 21 Century Fox at $85, which was rejected by Warner Chief Executive Jeff Bewkes.
The takeover, would pair the carrier of millions of wireless and pay-tv subscriber with Time Warner’s large media lineup that includes THT, CNN, HBO channel and Warner Bros. This would help further AT&T bet that television and video can drive growth into a stalled wireless market. AT&T has in the past noted that the future of mobile is video and the future of video is mobile. AT&T Chief Executive Randall Stephenson has already indicated that he would head the new company though Chief Executive Jeff Bewkes would stay for an interim period following the deal to aid in the transition.
The announcement comes at a time when AT&T announced its quarterly financial result, which depicted increased pressure in its traditional wireless business faces. The carrier lost 268,000 mainstream wireless phone customers. Its video business lost a net 3,000 clients with additional businesses including DirecTV failing to overcome the losses they had incurred. The company has already lost about 200,000 video customers since it acquired satellite TV provider DirecTV last year. Hopefully the Time Warner deal would help the company to find new areas of growth.
The two companies have already noted that they aim to be the first U.S wireless company to compete with cable companies by providing an online video bundle. According to the two, it would disrupt the traditional entertainment model and push the boundaries on mobile content availability for the benefit of customers.
Now, only one issue remains in this deal; whether regulators will be willing to allow another major consolidation in the media industry following misgiving from a prior deal with General Electric and Comcast. During a conference call Mr. Stephenson down played any regulatory roadblock, arguing that AT&T was not eliminating a competitor but buying a supplier, a type of combination that is not blocked by regulators.
Featured Image Credit: NY Times