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US telco AT&T to buy Time Warner for $US85.4b

Sunday, 23 Oct 2016 09:18:45

Time Warner is a major force in movies, TV and video games. (Reuters: Eric Thaye (file photo))

AT&T says it has agreed to buy Time Warner for $US85.4 billion ($112 billion) in the boldest move yet by a telecommunications company to acquire streaming content and attract a growing number of online viewers.

Key points:

  • Merger will likely face intense scrutiny by US antitrust enforcers
  • AT&T will pay $US107.50 ($141.29) per Time Warner share
  • Telecom company says it expected to close the deal by the end of 2017

The biggest deal in the world this year will, if approved by regulators, give AT&T control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted media assets.

The merger will likely face intense scrutiny by US antitrust enforcers worried that AT&T might try to limit distribution of Time Warner material.

The telecom giant will pay $US107.50 ($141.29) per Time Warner share, in a combination of cash and stock, worth $85.4 billion overall, according to a company statement.

AT&T said it expected to close the deal by the end of 2017.

The Dallas-based company said it and Time Warner were determining which Federal Communications Commission licenses, if any, would be transferred to AT&T in the deal.

Several US politicians were already worried about cable company Comcast Corp's $US30 billion ($39 billion) acquisition of NBCUniversal and have argued for close regulatory scrutiny of the AT&T deal.

Republican presidential nominee Donald Trump, who has complained about media coverage of his campaign, said at a rally on Saturday he would block any AT&T-Time Warner deal if he wins the November 8 election.

"It's too much concentration of power in the hands of too few," said Mr Trump.

Representatives of his Democratic rival, Hillary Clinton, did not immediately respond to a request for comment.

Merger part of plan to turn AT&T into media powerhouse

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.

Last year, it bought satellite TV provider DirecTV for $US48.5 billion ($63.7 billion).

The company also has about 142 million North American wireless subscribers, as of June 30, and about 38 million video subscribers through DirecTV and its U-verse service.

New York-based Time Warner is a major force in movies, TV and video games, with assets including the HBO, CNN, TBS and TNT networks as well as the Warner Bros film studio.

The company also owns a 10 per cent stake in video streaming site Hulu.

AT&T's wireless rival Verizon Communications is in the process of buying internet company Yahoo for about $US4.8 billion ($6.3 billion).

Time Warner chief executive officer Jeff Bewkes rejected an $US80 billion ($105 billion) offer from Twenty-First Century Fox in 2014.

AP/Reuters

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