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Published: Sun, October 30, 2016
Economy | By Melissa Porter

AT&T Announces Deal to Acquire Time Warner for $85.4 Billion

AT&T Announces Deal to Acquire Time Warner for $85.4 Billion

"Joining forces with AT&T gets us there faster and better than either of us can do on our own". AT&T buying Time Warner gives it greater negotiating power, as well as the ability to produce and distribute content on its own.

Both companies are running out of ways to grow in wireless, since most households have all the phones they need, and are already tethered to some company for service to those phones. AT&T has suggested it may also zero-rate its upcoming live-streaming DirecTV Now service, which doesn't require customers to install a dish on their homes.

The deal is certain to prompt strict scrutiny from the Justice Department and the Journal reported is is not expected to close for up to a year. While AT&T and Time Warner are gung-ho to get it done, not everyone feels the same way.

SAUL LOEB/AFP/Getty Images (FILES): This combination of pictures created on October 21, 2016 shows an AT&T cellphone store (TOP) in Springfield, Virginia, on October 23, 2014, and the Time Warner company logo on the front of the headquarters building, 24 November, 2003 in NY.

The two companies agreed to an 85 billion dollar bill on Saturday.

"In the modern history of the media and the Internet, the USA government has always approved vertical mergers like ours, because they benefit consumers, strengthen competition, and, in our case, encourage innovation and investment", David McAtee, AT&T senior executive vice president and general counsel, said in a statement on Sunday. Already, Sen. Al Franken, a Minnesota Democrat, said in a statement that the deal "raises some immediate flags about consolidation in the media market". The New York-based company's assets include Warner Bros film studio, CNN, TNT, TBS and HBO. "While we now believe the carrier has its plate full, over time we could see the value proposition provided by moving into the content arena", the analysts wrote. Other entities, he said, made more sense for the always-a-bridesmaid Time Warner. He said this has been true in regards to the big screen and the TV screen.

"When Jeff (Bewkes, Time Warner's chief executive) and I started talking, it became clear to us very quickly that we shared a very similar vision", Randall Stephenson, AT&T's chief executive, told reporters on Saturday. In 2000 it was acquired by AOL, in a deal that promised to fundamentally transform the media landscape but turned into one of the biggest disasters in corporate history (from 2003: AOL Posts Record $99-Billion Loss). In a speech in Gettysburg, Pennsylvania, Donald Trump said AT&T's purchase of Time Warner would give the combined group "too much concentration of power" and would "destroy democracy". "So any concerns by the regulators, we believe, will be adequately addressed by conditions, that's our anticipation."Time Warner must pay AT T US$1.725 billion if it finds a different buyer". Shares of AT&T, as is typical of acquirers in large deals, fell on the reports, ending Friday down 3 percent.

So the announcement this week that AT&T was swooping in to buy the company for $85.4 billion wasn't exactly a surprise. This means that the telecom company will now have full access and rights to broadcast movies and TV shows as well as the likes of NBA, MLB, and many other games that have been part of the Time Warner company.

Time Warner, in recent years, has accelerated its push into digital media, launching HBO Now almost 18 months ago.

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