AT&T to buy Time Warner for $85.4 billion
By Drew Harwell, Brian Fung and Christian Davenport
Oct 22 2016
AT&T said Saturday it had agreed to a blockbuster $85.4 billion acquisition of Time Warner, a move that would turn America’s most storied telecom company into one of the most prominent TV, film and video-game producers in the world.
The deal casts a spotlight on a defining movement for the giants of modern tech: Their accelerating conquest of media in an increasingly unbundled world.
AT&T, Amazon, Google and Verizon have all surged into original content, believing it offers them a lucrative foothold into viewers’ pockets and living rooms and a unique bulwark against the rapidly changing Web and cable television landscapes.
But the consolidation of media into a fewer empires has also renewed concerns over the fairness and freedom of tomorrow’s entertainment. Telecom gatekeepers such as AT&T could steer customers to their own offerings, muscling out independent artists and limiting choice. Or they could exclude non-customers, forcing curious audiences to subscribe or go without.
“You have a big distributor owning some of the largest networks. Is everyone going to have equal access to those networks?” said Eric Handler, a media and entertainment analyst for MKM Partners.
If approved by regulators, the deal would be the largest in a year of mega-mergers. AT&T said it is paying $107.50 per share to buy Time Warner. AT&T would also inherit Time Warner’s debt, bringing the total value of the transaction to $108.7 billion, the companies said.
The deal is also expected to attract heavy regulatory scrutiny over its potential to stifle media competition or suppress innovation. Regulators, Handler said, would ask whether creators in the shadow of the AT&T juggernaut could “survive in this new ecosystem.”
Donald Trump, the GOP presidential nominee, said Saturday that if elected he would block the merger.
“As an example of the power structure I am fighting, AT&T is buying Time Warner and thus CNN — a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few,” Trump said at a speech in Gettysburg, Pa.
News of the merger follows a wave of dealmaking and consolidation that has been transforming viewers’ leisure time and media spending, including Comcast’s purchase of NBCUniversal in 2011.
Tech giants, meanwhile, have been aggressively encroaching on traditional media. Google has pushed into live-TV streaming. And Netflix and Amazon doubled their yearly investments on programming between 2013 and 2015, reaching a combined $7.5 billion last year, more than CBS or HBO, according to industry researcher IHS Markit. Apple, which has more mobile screens in the hands of consumers than any other company in the United States, is also making moves to offer original services and content that can be directly accessed through its smartphones and tablets.
For years, AT&T has run the pipes to channel content to living room televisions or cell phones, but didn’t create the content itself. Its marriage with Time Warner would give AT&T prime control and potential influence over some of the biggest names in TV, news and film, including CNN, HBO and Warner Bros., the movie studio behind the “Harry Potter” and “Batman” films that is rivaled only by Disney and Universal for box-office supremacy.
Talks between AT&T and Time Warner began in earnest this August when the two companies’ respective chief executives, Randall Stephenson and Jeff Bewkes, met in New York to discuss the changes sweeping the media and technologies industries, the two men told reporters Saturday. Although Bewkes initially told Stephenson that Time Warner was not for sale, a deal came together very quickly, said Stephenson.
“I’ve been part of a lot of deals over my career,” he said. “This one was unique … this had what I call ‘gravity’ — it just seemed to move along on its own.”