NEW YORK:AT&T Inc is set toannounce as early as Saturday an $85 billion deal to buy TimeWarner Inc, sources familiar with...
NEW YORK:AT&T Inc is set toannounce as early as Saturday an $85 billion deal to buy TimeWarner Inc, sources familiar with the matter said,giving the telecom company control of cable TV channels HBO andCNN, film studio Warner Bros and other coveted media assets.
The deal would be the biggest merger in the world this yearand one of the largest in recent years in the sector.
Telecommunications companies have been looking for qualitycontent to stream over their high-speed networks, hoping toattract a growing group of viewers who want to ditch traditionalpay-TV packages in favor of streamlined offerings or watchingonline.
AT&T will pay $110 per Time Warner share, half in cash andhalf in stock, worth about $85 billion overall, sources toldReuters.
It will need to line up financing to pay for the deal,since it only has $7.2 billion in cash on hand.
This could putpressure on its credit rating as it already had $120 billion innet debt as of June 30, according to Mood's.
The boards of the two companies were meeting on Saturday toapprove the deal, sources told Reuters.
A deal would likely face intense scrutiny by USantitrustregulators.
The government may worry that other cable andinternet companies would be denied access to Time Warner contentlike HBO and CNN, said Andre Barlow, an antitrust lawyer at thelaw firm Doyle, Barlow & Mazard.
USRepublican presidential nominee Donald Trump, who hascomplained about what he sees as unfair coverage of hiscampaign, said at a rally on Saturday he would block anyAT&T-Time Warner deal if he wins the Nov.8 election.
"It´s too much concentration of power in the hands of toofew," Trump said.
Content plus delivery
AT&T, whose main wireless phone and broadband servicebusiness is showing signs of slowing, has already made moves toturn itself into a media powerhouse.
It bought satellite TVprovider DirecTV last year for $48.5 billion.
In 2014, AT&T entered a joint venture, Otter Media, with theChernin Group to invest in media businesses, and it has rolledout video streaming services.
Time Warner is a major force in movies, TV and video games.
Its assets include the HBO, CNN, TBS and TNT networks as well asthe Warner Bros film studio, producer of the "Batman" and "HarryPotter" film franchises.
The company also owns a 10 percentstake in video streaming site Hulu.
Time Warner Chief Executive Officer Jeff Bewkes rejected an$80 billion offer from Twenty-First Century Fox Inc in2014, but sources said on Friday that the former suitor had noplans to renew its bid.
The Wall Street Journal reported on Friday that Apple Incapproached Time Warner a few months ago about apossible merger.
Owning more content gives cable and telecom companies bargaining leverage with other content companies as customersdemand smaller, hand-picked cable offerings or switch towatching online.
New mobile technology including next-generation5G networks could make a content tie-up especially attractivefor wireless providers.
"We think 5G mobile is coming, we think 5G mobile is an epicgame-changer," Rich Tullo, director of research at Albert Fried& Company, said in a research note, adding that mobile providerswould be in position to disrupt traditional pay-TV services.
A previous Time Warner blockbuster deal, its 2000 mergerwith AOL, is now considered one of the most ill-advisedcorporate marriages on record.
Dallas-based AT&T and New York-based Time Warner did notimmediately return calls for comment.