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AT&T completes $85B acquisition of Time Warner *Updated 15th June 2018*

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15th June 2018 - AT&T completes $85B acquisition of Time Warner
AT&T has finalized its $85 billion deal to acquire Time Warner, two days after a federal judge cleared the way and ruled in favor of the merger over objections from the U.S. Department of Justice.

12th June 2018 - Deal has been approved

A federal judge in Washington, D.C., today cleared the way for the planned merger of AT&T and Time Warner in a landmark antitrust ruling that will likely accelerate the pace of media consolidation.

AT&T has reached a deal to acquire Time Warner for more than $85 billion, a blockbuster deal that fuses a mobile giant with an entertainment conglomerate, carrying with it the potential to reshape the media landscape.

The two companies jointly announced the deal, unanimously approved by both boards, that will see the mobile company pay $107.50 per share in a cash and stock transaction. The deal represents a marriage of Time Warner's limitless movie and television empire with AT&T's 315 million wireless subscribers.

"It's a great fit, and it creates immediate and long-term value for our shareholders," Stephenson said.

The deal, however, faces a stiff political and regulatory test. The populist winds buffeting Washington mean that legislators may not approve of another multi-billion corporate tie-up. Already, Republican presidential candidate Donald Trump said in a speech that under a potential GOP White House, his administration would not approve the deal.

The deal was agreed at a meeting of the two boards on Saturday but will still need to be approved by regulators. Correspondents say it is the biggest deal in the world this year.

It reflects the desire of the telecoms company to acquire content to stream over its high-speed network and attract more online viewers. If the deal is approved by regulators, AT&T would gain control of the HBO and CNN TV networks in addition to the Warner Bros film studio and other prized media assets.

AT&T CEO Randall Stephenson said he did not anticipate any regulatory obstacles to the merger, saying any concerns could be overcome if concessions were made.

"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," he said.

AT&T is in advanced talks to acquire Time Warner, according to three people briefed on the discussions, a deal that could be the largest in the United States this year.

The transaction is not yet final and may fall apart, said the people, who asked not to be named discussing private information. Time Warner is seeking more than $90 a share, two of the people said.

The apparent interest in Time Warner comes more than two years after AT&T announced a $48.5 billion deal for DirecTV, the nation’s largest satellite television provider. The merger created the country’s largest television distributor with about 26 million subscribers, surpassing Comcast.

Another large acquisition would be very difficult for AT&T to digest. The company has a debt load of about $130 billion, with just $7 billion in cash on hand. It could also raise antitrust concerns with regulators, who have quashed several deals this year because of competition issues.

With its wireless business facing limits to growth and television challenged more broadly, AT&T has sought to diversify through video content. Analysts have said it may pursue acquisitions to achieve that strategy.

Distributors like AT&T, Verizon Communications and Comcast have been either investing or buying companies that produce the content to gain control over their customers’ entertainment experiences. By purchasing DirecTV, AT&T obtained the rights to N.F.L. Sunday Ticket, giving customers access to every football game. The company also created a joint venture in 2014 with the Chernin Group to invest in media businesses and start internet streaming video services.

Time Warner would add a 10 percent stake in the streaming service Hulu, HBO’s traditional network and streaming service, the Turner cable TV networks and Warner Bros. film and television studios.

Today, Time Warner’s units include such premium channels as HBO and Cinemax, as well as Turner, which operates TBS, Turner Sports and others, in addition to CNN. Time Warner also runs Warner Bros. Entertainment, which created movies like “Sully,” “Storks” and “Suicide Squad.”

Time Warner's stock soared nearly 8% Friday on reports that telecom and media giant AT&T may make a takeover bid for the company. A deal would be the latest example of convergence in the media and tech world, and it could usher in another wave of consolidation in the sector.

The Wall Street Journal, citing anonymous sources, said that a deal could happen as soon as this weekend. (Time Warner is the parent company of CNN.)

Shares of AT&T were down 3% after the news broke.

AT&T declined to comment to CNNMoney, and Time Warner (TWX) did not immediately return requests for comment.

Several news outlets cited a range of possible sale prices, from at least $90 per share to $110 per share. AT&T reportedly would use cash and its own stock to finance the deal. It is currently worth $230 billion, while Time Warner's market value is about $70 billion.

Larry Haverty, associate portfolio manager with The Gabelli Multimedia Trust (GGT) -- a fund that owns shares of both AT&T and Time Warner -- said he thinks it is "highly likely" the two companies will combine.

He added that AT&T could wind up paying as much as $110 a share for Time Warner, which is a price that has also been reported by Bloomberg. That would be almost 25% higher than the stock's current price, and would value Time Warner at more than $85 billion.

But any AT&T-Time Warner deal would be subject to a lengthy regulatory review process.

That's because an acquisition of Time Warner would cement AT&T (T, Tech30) as one of the country's dominant media companies, with significant control over both programming and the distribution of that programming.

AT&T recently completed the acquisition of satellite TV provider DirecTV, which has access to 20 million households in the United States and also holds the lucrative rights to the National Football League's Sunday Ticket package.

AT&T's broadband U-Verse service has another 5 million subscribers in the U.S. AT&T also still owns a huge wireless and landline phone business as well. This is the company many still know by its nickname Ma Bell after all.

With the addition of Time Warner, AT&T would gain control of household names in the media world: CNN, HBO, a collection of valuable cable channels like TNT and Cartoon Network and the Warner Bros. movie and TV studio.

A purchase of Time Warner would immediately make AT&T a global media giant, on par with cable company Comcast (CMCSA) -- which also owns NBCUniversal and DreamWorks Animation -- as well as Disney (DIS), the parent of ESPN, ABC, Lucasfilm, Pixar and Marvel.

AT&T CEO Randall Stephenson has made it known that he wants AT&T to control more programming. And the Comcast-NBC merger has proven that a content distribution firm can thrive by owning a media firm as well.

Bloomberg reported on Thursday that talks between AT&T and Time Warner have been taking place for several weeks.
Time Warner CEO Jeff Bewkes is a "willing seller" if he "gets an offer he thinks is fair," Bloomberg said, citing an anonymous source.

This isn't the first time that Time Warner has been in play. Rupert Murdoch's Fox (FOXA) made an offer for Time Warner in 2014 but withdrew the bid after it became clear that Time Warner was not interested in a deal.

At the time, a senior source involved in the bid said Murdoch was the wrong bidder at the wrong time.
"Wait two or three years," the source said, "and Time Warner will be on the market."

Sure enough, two years later there has been anticipation on Wall Street about a potential Time Warner transaction.

AT&T Inc. is in advanced talks to acquire Time Warner Inc., according to people familiar with the matter, a deal that would create a new hallmark in the rapidly converging realms of media, communications and the internet.

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