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AT&T Shakes Industry With $85B TW Bid

In what could go down as the deal of the century, AT&T plans to spend an industry-shaking $85 billion on media giant Time Warner.

The takeover would turn AT&T Inc. (NYSE: T) into a vertically integrated player straddling the telecom and media markets. At a stroke, it would become the owner of some of the most popular video content on the planet, including shows like Westworld, Veep and Game of Thrones. As the battle over premium content heats up, AT&T will control much of what viewers are watching besides the networks on which it is screened.

Table 1: AT&T & Time Warner at a Glance

AT&T Time Warner
CEO Randall Stephenson Jeff Bewkes
Headquarters Dallas New York City
Employees 281,450 24,800
Revenues (2015) $146.8 billion $28.1 billion
Operating income (2015) $24.8 billion $6.0 billion
Net profit (2015) $13.7 billion $3.8 billion
Capital expenditure (2015) $19.2 billion $423 million
Current market cap $226.7 billion $68.1 billion
Source: AT&T, Time Warner.

But the deal faces a number of obstacles. AT&T CEO Randall Stephenson is doing his PR bit, insisting the lack of overlap between AT&T and Time Warner Inc. (NYSE: TWX) should see any regulatory opposition melt away. Others have a different take, with Republican presidential candidate Donald Trump reportedly describing the tie-up as an "example of the power structure I'm fighting." Democrats have also voiced objections to the deal. And the share prices of both companies fell on Monday amid Wall Street skepticism.


Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.


In the meantime, rivals from Verizon Communications Inc. (NYSE: VZ) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) to Netflix Inc. (Nasdaq: NFLX) and Google (Nasdaq: GOOG) will be pondering the implications of a merger for their own communications, entertainment and advertising businesses.

Light Reading has been tracking developments from the outset and will continue to provide insight and opinion on what this move would mean for AT&T, Time Warner and everyone else. Check out our coverage below:

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

KBode 10/31/2016 | 1:12:25 PM
Re: Bewkes, take 2 I'd worry that AT&T is buying high. They're spending $150 billion on two arguably last-gen media empires on the eve of the cord cutting revolution, saddling themselves with mammoth debt, potentially impacting their credit rating, and also possibly impacting their incentive auction plans. I'm not so sure this price tag is going to be remotely worth it as more and more streaming companies continue building their own content empires independent from the traditional sector...
iainmorris 10/25/2016 | 10:02:43 AM
Re: Bewkes, take 2 I agree it's a question that needs asking and is probably on a lot of minds right now. I wouldn't want to suggest this particular deal will have much better prospects but I would say that the AOL-Time Warner happened in very different circumstances -- ancient history, really, in terms of technology development -- and was derailed partly by the dotcom crash and economic recession in the early 2000s. There were obviously a lot of operational issues and corporate clashes as regards the merger and those are things AT&T will obviously be keen to avoid.
jbtombes 10/25/2016 | 9:50:31 AM
Bewkes, take 2 Stephenson is out front on this, but someone should check in with Bewkes too, on his take of why the AOL merger didn't work out and why this should.
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