Time's Up Warner !!!

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For companies that sell consumers cable and internet service, merely distributing entertainment and programs is not enough. They want to own them.

The media conglomerate Times Warner which owns HBO, CNN and the movie studio Warner Bros., has long been among the most prized takeover targets.

A combined AT&T-Time Warner would boast a market cap north of $305 billion, making it a more valuable company than Comcast and Disney, combined.

Time Warner has agreed to be acquired by AT&T in a stock and cash transaction that values the entertainment conglomerate at $86 billion, according to a person familiar with the negotiations.

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, USA's biggest pay television provider as well as its second-largest wireless operator.

Time Warner Chief Executive Jeff Bewkes rejected an $80 billion offer from Twenty-First Century Fox Inc in 2014, but sources said that the former suitor had no plans to renew its bid now.

The Wall Street Journal reported on Friday that Apple Inc. approached Time Warner a few months ago about a possible merger.

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"Even if AT&T doesn't buy Time Warner, it could buy other programming companies. Over the next three to five years, AT&T will seek deals to become a producer of programming, shifting its business model so that it owns some of the content it distributes," Bloomberg had reported earlier this month.

But several analysts now are questioning whether AT&T might be overreaching. 

“It makes no sense,” said Doug Creutz, a media analyst. “You’re paying a lot of money to do something you could have done by just licensing content from Time Warner. Vertical integration doesn’t really work in this business.”  

Should AT&T pull off a deal (which is almost set), it would represent the biggest in the latest wave of media mergers. It would become a much larger version of the massive deal structured by Philadelphia cable giant Comcast more than six years ago to buy NBCUniversal, which gave Comcast distribution outlets and valuable media properties, including NBC, CNBC and Universal Studios. 

Andre Barlow, an antitrust lawyer at the law firm Doyle, Barlow and Mazard, noted that the government may worry about whether other cable and internet companies would continue to have access to Time Warner content like HBO and CNN.

The media industry has been seen as ripe for consolidation, and several stocks rose on the news, including Netflix, which closed up about 3.4%, and Discovery Communications, which ended up 3.6%.

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