It’s official: AT&T is set to assimilate Time Warner through a game-changing US$84.5 billion stock-and-cash transaction that will see the creation of a new corporate entity completed by the end of 2017.
The media telco born from the merger of corporate giants will tap Time Warner’s massive well of premium content resources, including its large film/TV studios, and library of entertainment content and brands across video programming and TV/film production. Added to that will be the heft of AT&T’s direct-to-consumer distribution capabilities across TV, mobile and broadband.
AT&T will take control of Time Warner’s divisions, including Warner Bros. Entertainment, which consists of television, feature film, home video and video game production and distribution. The latter covers off many profitable film franchises such as Harry Potter and DC Comics, as well as a number of successful TV series, both scripted (The Big Bang Theory) and unscripted (Little Big Shots and the upcoming Little Big Shots: Forever Young).
Also included under the deal are HBO, which consists of domestic premium pay television and streaming services (HBO Now, HBO Go), as well as international premium and basic pay services; and Turner’s U.S. and international basic cable networks including TNT, TBS, CNN, and Cartoon Network/Adult Swim. Turner also has the rights to the NBA, March Madness and MLB.
Time Warner also has investments in OTT and digital media properties such as Hulu, Bleacher Report, CNN.com and Fandango.
The move is, in large part, designed to position AT&T to profit from an increasingly multi-platform media landscape where mobile video consumption is skyrocketing, particularly among millennial and Gen Z viewers.
“Premium content always wins,” said Randall Stephenson, AT&T chair and CEO, in a statement. “It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We’ll have the world’s best premium content with the networks to deliver it to every screen.”
The acquisition comes at a time of financial boon for Time Warner. Company chair and CEO Jeff Bewkes said the forthcoming Q3 earnings’ report will see revenue and operating income growth in each of its divisions, as well as “double-digit” earnings growth.
“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,” he said.
AT&T, with a mobile network of more than 315 million people in the U.S., is now in a position to become the first U.S. mobile provider to compete nationwide with cable companies in the provision of bundled mobile and broadband video, according to a company statement. In doing so, it seeks to “disrupt the traditional entertainment model and push the boundaries on mobile content availability for the benefit of customers. And it will deliver more innovation with new forms of original content built for mobile and social.”
AT&T’s move to buy Time Warner has also served as an aggressive response to a trend of competitive consolidation and increased competition in the communications industry. In 2011 Comcast initiated its acquisition of NBCUniversal from General Electric. Verizon bought AOL in 2015 and added Yahoo to its portfolio this year. The latter deal, worth an estimated US$5 billion, is still pending.
The Time Warner acquisition is still subject to approval by Time Warner shareholders and a review by the U.S. Department of Justice. The transaction is expected to close before year-end 2017.