AT&T Reaches Deal to Buy Time Warner for More Than $80 Billion
October 22 2016 - 2:11PM
Dow Jones News
By Thomas Gryta and Keach Hagey
AT&T Inc. has reached an agreement to buy Time Warner Inc.
for between $105 and $110 a share, with a deal likely to be
announced as soon as Saturday evening, according to people familiar
with the plans.
The boards of the two companies are meeting on Saturday to
approve the transaction, the people said. The deal is half cash and
half stock, according to one of the people.
The acquisition is valued at more than $80 billion and pushes
the carrier deeper into the traditional entertainment business at a
time of stalled wireless growth. For Time Warner, the deal
represents a victory for Chief Executive Jeff Bewkes, 64, who took
some heat from investors for rebuffing a takeover bid two years ago
from 21st Century Fox at $85 a share.
The pairing brings together AT&T's millions of wireless and
pay-television subscribers with Time Warner's deep media lineup
including networks such as CNN, TNT, the prized HBO channel and
Warner Bros. film and TV studio.
A merger of the companies would be the most ambitious marriage
of content and distribution in the media and telecom industries
since Comcast Corp.'s purchase of NBCUniversal and would create a
behemoth to rival that cable giant. A rigorous regulatory review is
expected and the acquisition of Time Warner likely wouldn't close
until late 2017, people close to the process said.
Regulators have indicated misgivings about the prior
Comcast-NBCU deal -- in particular, whether obligations placed on
Comcast were tough enough and enforceable -- so it is unclear if
they will be willing to bless another such merger. At the very
least, former regulatory officials say there could be significant
conditions placed on the combination.
The transaction would be far and away the biggest media deal of
recent years. Time Warner had a market capitalization of $68
billion before The Wall Street Journal reported on the advanced
talks Friday, while AT&T's was $233 billion.
On Friday, Time Warner shares closed at $89.48, up 8%.
AT&T has been shifting its sights to media and video in
recent years, diving deeper into television after its nearly $50
billion deal to acquire satellite television provider DirecTV last
year. That made AT&T, which traces its roots to the old 'Ma
Bell, the country's biggest pay television provider as well as its
second-largest wireless operator.
Time Warner "is the last scaled content play that's acquirable,"
said Michael Nathanson, an analyst at MoffettNathanson, noting that
the rest of the major media companies are either so valuable they
would be difficult to acquire, like Walt Disney Co., or family
controlled, like 21st Century Fox, CBS and Viacom. "HBO, Turner and
Warner Bros. are really good assets for a future of nonlinear
consumption."
Write to Thomas Gryta at thomas.gryta@wsj.com and Keach Hagey at
keach.hagey@wsj.com
(END) Dow Jones Newswires
October 22, 2016 13:56 ET (17:56 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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