As had been leaked over the past two days, moments ago the WSJ confirmed that AT&T has agreed to buy Time Warner in a deal worth more than $80 billion, or between $105 and $110 per share, with the transaction set to be announced "as soon as Saturday evening."
The boards of the two companies are meeting on Saturday to approve the transaction, the WSJ said citing people familiar. The $80BN deal is half cash and half stock. The transaction brings together millions of AT&T wireless and pay-TV subscribers - recall AT&T's most recent mega deal was its $50 billion acquisition of DirectTV - with Time Warner’s dep content and media lineup, including networks such as CNN, TNT, the cash cash that is HBO and Warner Bros. film and TV studio.
The transaction would be far and away the biggest media deal of recent years. Time Warner had a market capitalization of $68 billion before The Wall Street Journal reported on the advanced talks Friday, while AT&T’s was $233 billion. AT&T has been shifting its sights to media and video in recent years, diving deeper into television after its nearly $50 billion deal to acquire satellite television provider DirecTV last year. That made AT&T, which traces its roots to the old ‘Ma Bell, the country’s biggest pay television provider as well as its second-largest wireless operator.
As the WSJ writes, "the acquisition is valued at more than $80 billion and pushes the carrier deeper into the traditional entertainment business at a time of stalled wireless growth." The good news for Time Warner CEO Jeff Bewkes, is that by rebuffing a takeover bid from 21st Century Fox two years ago for $85 a share, he has managed to generate another 30% in upside to shareholders all thanks to an epic scramble for yield, which is what will make this deal possible.
This latest megamerger would be the most ambitious marriage of content and distribution in the media and telecom industries since Comcast Corp.’s purchase of NBCUniversal and would create a behemoth to rival that cable giant. A rigorous regulatory review is expected and the acquisition of Time Warner likely wouldn’t close until late 2017, people close to the process said.
Regulators have indicated misgivings about the prior Comcast-NBCU deal—in particular, whether obligations placed on Comcast were tough enough and enforceable—so it is unclear if they will be willing to bless another such merger. At the very least, former regulatory officials say there could be significant conditions placed on the combination.
To be sure, the deal may quickly become a no deal should Trump get elected on November 8.
As he warned moments ago, "as an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few." We are confident the merger document, when revealed, will have a Material Adverse Change clause that captures Trump's sentiment perfectly.