The story appears on

Page A5

October 24, 2016

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Media

AT&T buys Time Warner to get media assets in US$85.4b deal

AT&T Inc said on Saturday it agreed to buy Time Warner Inc for US$85.4 billion, the boldest move yet by a telecommunications company to acquire content to stream over its network to attract a growing number of online viewers.

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

AT&T will pay US$107.50 per Time Warner share, half in cash and half in stock, worth US$85.4 billion overall, according to a company statement. AT&T said it expected to close the deal by the end of 2017.

Dallas-based AT&T said the Department of Justice would review the deal and that the companies were determining which Federal Communications Commission licenses, if any, would be transferred to AT&T in the deal.

US lawmakers were already worried about cable company Comcast Corp’s US$30 billion acquisition of NBCUniversal, and several argued for close regulatory scrutiny of the AT&T deal.

“Such a massive consolidation in this industry requires rigorous evaluation and serious scrutiny,” said Senator Richard Blumenthal, Senate Judiciary Committee member and former attorney general of Connecticut. “I will be looking closely at what this merger means for consumers and their pocketbooks.”

Republican presidential nominee Donald Trump said at a rally he would block any AT&T-Time Warner deal if he wins the November 8 election. Trump has complained about media coverage of his campaign, especially by Time Warner’s CNN.

“It’s too much concentration of power in the hands of too few,” said Trump.

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

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. It bought satellite TV provider DirecTV last year for US$48.5 billion.

It had 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. Its assets include the HBO, CNN, TBS and TNT networks as well as the Warner Bros film studio, producer of “Batman“ and “Harry Potter” film franchises. The company also owns 10 percent of video streaming site Hulu. The HBO network alone has more than 130 million subscribers.

AT&T Chief Executive Officer Randall Stephenson told reporters on a conference call that owning Time Warner and all its content will provide a greater competitive advantage than just continuing to license it.

Talks between Stephenson and Time Warner CEO Jeff Bewkes began in August, they said. “Jeff and I both had a vision that if you put these two together, you could innovate much faster,” said Stephenson.

Bewkes, who rejected an US$80 billion offer from Twenty-First Century Fox Inc in 2014, will stay on for an open-ended period of time to help with the integration.

Stephenson called the deal “vertical” rather than “horizontal” and played down regulatory hurdles.

“There’s no competitor being removed from the marketplace, there’s no competitive harm that is being rendered by putting these two companies together,” said Stephenson. “So any concerns by the regulators, we believe, will be adequately addressed by conditions, that’s our anticipation.”

Time Warner must pay AT&T US$1.725 billion if it finds a different buyer. If regulators block the deal, AT&T must pay Time Warner US$500 million, according to people familiar with the deal.

The telecom and media sectors have been consolidating. In addition to Comcast’s purchase of NBCUniversal, AT&T’s wireless rival Verizon Communications Inc is in the process of buying Internet company Yahoo Inc for about US$4.8 billion.

AT&T said it would finance the cash portion of the purchase with new debt and cash on its balance sheet. AT&T said it has an 18-month commitment for an unsecured bridge term facility for US$40 billion.

AT&T has only US$7.2 billion in cash on hand. Further borrowing could pressure its credit rating as it already had US$120 billion in net debt as of June 30, according to Moody’s.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend