DALLAS\/NEW YORK: A definitive agreement has been reached that will see AT&T acquire Time Warner for around $85.4 billion, leaving many analysts to consider\u00a0the implications of such a large-scale mega-merger.<\/p>\n
The agreement has been approved unanimously by the boards of directors of both companies. It\u00a0will, however, be subject to a review by government regulators that could take more than a year to complete.<\/p>\n
AT&T gains control of the assets in\u00a0Time Warner\u2019s three divisions: HBO, which encompasses domestic premium pay TV\u00a0and streaming services (HBO Now, HBO Go), as well as international premium and basic pay television and streaming services; Warner Bros. Entertainment, which consists of TV, feature film, home video and video game production and distribution; and Turner, which includes\u00a0U.S. and international basic cable networks, including TNT, TBS, CNN and Cartoon Network\/Adult Swim. Time Warner also has investments\u00a0in OTT and digital media properties such as Hulu, Bleacher Report, CNN.com and Fandango.<\/p>\n
\u201cThis 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,\u201d said Randall Stephenson, AT&T’s chairman and CEO. \u201cPremium content always wins. It has been true on the big screen, the TV screen and now it\u2019s proving true on the mobile screen. We\u2019ll have the world\u2019s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that. We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.<\/p>\n
\u201cWith great content, you can build truly differentiated video services, whether it\u2019s traditional TV, OTT or mobile. Our TV, mobile and broadband distribution and direct customer relationships provide unique insights from which we can offer addressable advertising and better tailor content,\u201d Stephenson said. \u201cIt\u2019s an integrated approach and we believe it\u2019s the model that wins over time.<\/p>\n
\u201cTime Warner\u2019s leadership, creative talent and content are second to none. Combine that with 100 million plus customers who subscribe to our TV, mobile and broadband services\u2014and you have something really special,\u201d said Stephenson. \u201cIt\u2019s a great fit, and it creates immediate and long-term value for our shareholders.\u201d<\/p>\n
Time Warner’s chairman and CEO, Jeff Bewkes, said, \u201cThis is a great day for Time Warner and its shareholders. Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis and to capitalize on the tremendous opportunities created by the growing demand for video content. That\u2019s been one of our most important strategic priorities and we\u2019re already making great progress\u2014both in partnership with our distributors, and on our own by connecting directly with consumers. Joining forces with AT&T will allow us to innovate even more quickly and create more value for consumers along with all our distribution and marketing partners, and allow us to build on a track record of creative and financial excellence that is second to none in our industry. In fact, when we announce our 3Q earnings, we will report revenue and operating income growth at each of our divisions, as well as double-digit earnings growth.<\/p>\n
Bewkes continued, \u201cThis is a natural fit between two companies with great legacies of innovation that have shaped the modern media and communications landscape, and my senior management team and I are looking forward to working closely with Randall and our new colleagues as we begin to capture the tremendous opportunities this creates to make our content even more powerful, engaging and valuable for global audiences.\u201d<\/p>\n
Time Warner shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock.\u00a0This purchase price implies\u00a0a total equity value of $85.4 billion and a total transaction value of\u00a0$108.7 billion, including Time Warner\u2019s net debt.<\/p>\n
The international media community has much to say about the potential clearance of the mega-merger.<\/p>\n
\u201cAllowing a communications behemoth like AT&T to swallow the Time Warner media empire should be unthinkable,\u201d said former FCC Commissioner and Common Cause Special Adviser Michael Copps. \u201cThe sorry history of mega-mergers shows they run roughshod over the public interest. Further entrenching monopoly harms innovation and drives up prices for consumers. The answer is clear: regulators must say no.\u201d\u00a0<\/span><\/p>\n In analyzing the current landscape, Seth Wallis-Jones, senior analyst at IHS Technology, said: “This is a major attempt at vertical integration by AT&T that builds on last year\u2019s merger acquisition of DirecTV to create a fully integrated media giant. AT&T will own the distribution pipes and the content to deliver to subscribers across the U.S. mobile, fixed line and satellite. In comparison, Verizon\u2019s nascent deal to acquire Yahoo and build on its acquisition of AOL looks like an increasingly half-baked attempt to leverage the potential nexus between network, content and advertising.<\/span><\/p>\n “Across the world, content has become a key tool for network operators seeking to differentiate themselves from their competitors, and an opportunity for growth as operator services subscription growth slows in the face of market saturation. Deals for exclusive access to content have been leveraged to build audiences for digital \u2018over the top\u2019 services. While sport has proved to be a major area of competition for the networks as they enter the content arena, properties such as HBO\u2019s Game of Thrones<\/em> hold a similar \u2018must have\u2019 attraction for audiences.<\/span><\/p>\n “While this is not a consolidation as such, but the acquisition of a supplier, this deal creates an entity with significant synergistic scale. This is not a done deal and political scrutiny will follow. A major hurdle has arisen as Donald Trump has recently railed against the acquisition of NBCUniversal by Comcast in 2013, threatening it with a\u00a0review and potentially a breakup. Trump brought that position to bear over the weekend, threatening to block the deal as the agreement was revealed. Clinton\u2019s campaign has already indicated that she believes the deal should face scrutiny.”<\/span><\/p>\n Ted Hall, director of research\u00a0at\u00a0IHS Technology, had this to say when analyzing the\u00a0competition and pay-TV deals: “<\/span>DTH operator Dish Network has blazed a trail in \u2018pay TV lite\u2019\u2014services that provide access to slimmed down channel bundles without the need for a traditional TV subscription\u2014with its Sling TV offering, but the competition is about to heat up. AT&T is set to launch a pair of new online subscription TV offerings (DirecTV Now and DirecTV Mobile) before the end of 2016. The former is shaping up to be a \u2018virtual\u2019 pay TV offering comparable to a typical cable\/satellite subscription, the latter a mobile-led \u2018skinny bundle\u2019 offering. License to package content sourced from Time Warner networks HBO, TNT and Cartoon Network, as well as the Warner Bros. studio, would give AT&T the opportunity to make both services highly compelling.<\/span><\/p>\n “The need to be competitive in this area is becoming paramount, with the likes of Hulu and YouTube preparing linear-channel-based online subscription offerings of their own. In the context of the wider pay TV business, future growth in the saturated and declining traditional TV market is likely to come from online services\u2014AT&T has shown that it is not immune to the cord-cutting that has eaten into the cable sector, losing a combined 132,000 subscribers across its DirecTV (satellite) and U-verse (IPTV) platforms in the 12 month to end-Q3 2016.”<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" DALLAS\/NEW YORK: A definitive agreement has been reached that will see AT&T acquire Time Warner for around $85.4 billion, leaving many analysts to consider the implications of such a large-scale mega-merger.<\/p>\n","protected":false},"author":350,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[69],"tags":[183,988],"class_list":["post-7420","post","type-post","status-publish","format-standard","","category-top-stories","tag-att","tag-time-warner"],"yoast_head":"\n