Published: Fri, October 28, 2016
Tech | By Dwayne Harmon

Giant deal between AT&T and Time Warner

AT&T has reached an agreement to acquire Time Warner for $85.4 billion, combining the telecom and entertainment companies to create a media giant.

The addition of Time Warner adds cable TV channels HBO, Turner Network Television and CNN, as well one of Hollywood's largest film studios, Warner Bros.

AT&T, whose main wireless phone and broadband service business is showing signs of slowing, has already made moves to turn itself into a media powerhouse.

Republican presidential nominee Donald Trump has said he will block the deal if he is elected.

Arguing that such deals were examples of a media power structure rigged against him as well as American voters, Trump said during a Saturday campaign speech in Gettysburg, Pennsylvania, that "When a simple phone call placed with the biggest newspapers or television networks gets them wall-to-wall coverage with virtually no fact-checking whatsoever, here is why this is relevant to you".

AT&T just previous year completed the $48.5bn purchase of DirecTV, a satellite provider, making the company the largest pay-TV distributor in America with 25m subscribers. The highest was AOL's $94 billion acquisition of Time Warner at the end of the dot-com boom.

An AT&T statement said that aim of the deal is to give customers "unmatched choice, quality, value and experiences that will define the future of media and communications" and the new company will "lead the next wave of innovation in converging media and communications industry".

Word of the possible deal leaked out on Thursday; AT&T executives were said to be eager to finish the talks before the market opens on Monday morning. "While competition is generally tame within the wireless industry, many believe the dominant operators are about to enter a prolonged phase of share donation to Sprint and T-Mobile", wrote Walter Piecyk of the research firm BTIG. "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.

Sales rose 4.6% to $40.8 billion, Dallas-based AT&T said in a statement on Saturday night.

Bewkes turned down an $80bn offer for Time Warner from 21st Century Fox in 2014. Verizon bought AOL a year ago and has now proposed a deal for Yahoo to build a digital-ad business. What remains of the company are still valuable assets, among them HBO, Warner Bros., DC Comics, and several notable cable channels such as CNN and Cartoon Network.

AT&T has pursued an aggressive expansion, paying nearly $50 billion to buy satellite television provider DirecTV in 2015.

He also said he would look at "breaking" up Comcast's acquisition of NBC Universal in 2013.

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. Content also builds the advertising ecosystem, should drive distribution network usage and hit shows like Game of Thrones are valuable properties that can be licensed and distributed overseas.

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