AT&T to buy Time Warner for $85 Billion
According to Reuters, an international news agency, AT&T Inc. announced its agreement to buy Time Warner Inc. for $85.4 billion. If approved by regulators, this would give AT&T control of cable TV channels HBO and CNN, Warner Bros. Studios and many other media assets of Time Warner.
Considered the “biggest deal in the world” this year, AT&T will pay $107.50 per Time Warner share, half in cash and the other half in stock, according to a company statement. According to Reuters, AT&T plans to close the deal by the end of 2017.
Lawmakers are already worried with rival cable company Comcast Corp.’s $30 billion acquisition of NBC Universal, similar to the AT&T deal. "Such a massive consolidation in this industry requires rigorous evaluation and serious scrutiny," said U.S. 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."
In a company statement, AT&T announced the U.S. Department of Justice will review the deal and which FCC licenses would be transferred to AT&T once the deal is finalized.
Republican nominee Donald J. Trump has stated he would block any AT&T-Time Warner Deal if he were to win the November 8 election, according to Reuters. "It's too much concentration of power in the hands of too few," said Trump. Trump has complained about the media coverage regarding his campaign depicted by Time Warner’s channel, CNN.
AT&T plans to turn its company into a media powerhouse as it recently bought DIRECTV last year for $48.5 million dollars. According to Reuters, AT&T already has 142 million North American wireless subscribers and over 38 million video subscribers through services DIRECTV and U-Verse.
"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, according to Reuters. "So any concerns by the regulators, we believe, will be adequately addressed by conditions, that's our anticipation."
If Time Warner finds a different buyer, the company must pay AT&T $1.725 billion. AT&T must pay Time Warner $500 million if regulators block the deal.
According to Vox, an American digital media company, the AT&T-Time Warner merge may backfire due to AOL’s disastrous 1999 acquisition of Time Warner, which is still remembered as the most catastrophically failed merger of all time. The only money that would be in jeopardy would be from the shareholders, so the premium AT&T would have to pay would not be an issue.