AT&T Inc. has agreed to buy Time Warner Inc. in a deal worth about $80 billion, bringing disparate assets including satellite TV provider DirecTV, cell phone network AT&T Wireless, the Warner Bros. movie studio and HBO and Turner cable channels under one umbrella, The Wall St. Journal reported Sunday.
The deal is the largest media merger since AOL’s $165 billion purchase of Time Warner in 2000 — which did not work out so well. AOL took a $99 billion loss in 2003 as its internet business collapsed, and Verizon bought the company for $4.4 billion last year. Time Warner hopes its second time as part of a mega-merger has a better result.
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In fact, this deal most resembles Comcast’s 2011 purchase of a majority stake in NBCUniversal, which combined the country’s largest cable provider with another media company that also owned a handful of TV networks and a film studio. Regulators imposed a litany of conditions on the deal, which took more than a year from announcement to completion — which AT&T and Time Warner should expect to happen again.
Time Warner CEO Jeff Bewkes has streamlined the company in recent years, spinning off Time Warner Cable and AOL in 2009 and Time Inc. in 2014, choosing to focus on its cable channels and movie studio.
Both of those have had a resurgent 2016, which helped drive Time Warner’s stock up 28 percent year-to-date — before surging again on Friday as the deal appeared imminent. Warner Bros. placed third last year among major studios, with 14 percent market share, but is at 18 percent through Oct. 16 this year, trailing only Disney, which is on a record box office pace.
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And CNN has seen its ratings soar as a result of 2016’s unpredictable and circus-like election, which has largely played out on cable news and social media. At the Goldman Sachs Communacopia conference in New York last month, Bewkes said CNN was having a “killer year.”
Meanwhile, AT&T has been transforming itself, building a diversified media company atop its telecom roots. Last year, it acquired satellite TV provider DirecTV for $49 billion, and since then, it’s been negotiating deals with content providers ahead of the launch of DirecTV Now, its planned over-the-top streaming offering.
Time Warner owns 10 percent of Hulu, which is planning its own standalone streaming service — and would give AT&T an economic interest in what should be another significant player in streaming. That’s significant because like every other pay TV provider, AT&T has had to deal with subscriber losses stemming from cord-cutting.
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