AT&T Holding Talks With Time Warner Over Acquisition


Time Warner - not to be confused with Time Warner Cable, which sold itself to Charter Communications earlier this year - owns HBO, CNN, Warner Bros movie studio, the D.C. comics brand, a highly profitable video game studio, among many other properties.

The deal is under scrutiny because the acquisition is a major milestone for AT&T as Time Warner is a well-established telecommunications company. AT&T said it is paying $107.50 per share to buy Time Warner. It will also need to secure financing to fund the purchase as it only has $7.2 billion in cash available. This could put pressure on its credit rating as it already has $120 billion in net debt as of June 30, according to Moody's.

Rumours of an impending deal between the companies had been circulating towards the end of the working week, with the boards of the two companies reportedly meeting on Saturday.

The pay-TV distributors have been combining as well, building negotiating leverage to rein in the price increases that media companies seek for their TV networks.

The merged company could crowd out or block alternative programming on its TV service, give preferential treatment to its own content on its broadband Internet service, or impose higher costs for TV competitors seeking to run Time Warner shows. The acquisition comes a little more than a year after Dallas-based AT&T became the largest US pay-TV distributor when it completed its $48.5 billion purchase of satellite-TV provider DirecTV.

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AT&T buying HBO and CNN owner Time Warner for $85.4 billion
Although Bewkes initially told Stephenson that Time Warner was not for sale, a deal came together very quickly, Stephenson said. AT&T would also inherit Time Warner's debt, bringing the total value of the transaction to $108.7 billion, the companies said.

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After its acquisition of satellite television service DirecTV, telephone giant AT&T Inc. might be setting its sights on an even bigger prize, Time Warner Inc. He said, for example, AT&T might let wireless customers watch TV and movies from Time Warner without counting it against their data caps, which would make video from other providers less attractive. These include HBC, CNN, TBS tv networks as wells as Warner Bros film studio which produces films Batman and Harry Pottery. AT&T tops the group table in the informitv Multiscreen Index with 37.82 million subscribers.

"DirecTV, for instance, might favor Time Warner content, crowding out or refusing to carry alternative and independent programming that viewers might prefer", he said. AT&T's wireless rival Verizon Communications Inc is in the process of buying internet company Yahoo Inc for about US$4.8 billion.

Time Warner declined a similar offer from 21st Century Fox two years ago. Sources said on Friday that the former suitor had no plans to renew its bid.

Director of research at Albert Fried & Company, Rich Tullo, said the 5G is coming and this could be an epic game-changer in the wireless industry with added power to mobile providers to disrupt traditional pay-TV services.