AT&T buys Time Warner for $80bn as Trump slams deal
Boards of both companies unanimously approve agreement but Donald Trump says: Deals like this destroy democracy
The telecoms giant AT&T has agreed to pay more than $80bn to buy the media powerhouse Time Warner and create one of the worlds largest media, TV and telecoms firms.
The boards of the two companies unanimously approved the deal on Saturday according to a statement. Neither company offered immediate comment.
The deal, which combines Americas second-largest wireless telecoms company with the owner of HBO, CNN, Cartoon Network and the Warner Brothers movies, is likely to face tough regulatory scrutiny due to fears it could lead to less consumer choice and higher prices.
The Republican presidential nominee said on Saturday he would block the deal if he were elected. In a speech in Gettysburg, Pennsylvania, Donald Trump said AT&Ts purchase of Time Warner would give the combined group too much concentration of power and would destroy democracy.
Speaking about his continuing battle with the dishonest mainstream media, Trump said: Theyre trying desperately to suppress my vote and the voice of the American people.
As an example of the power structure Im fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because its too much concentration of power in the hands of too few.
Trump said he would also consider breaking up the last big media deal, Comcasts acquisition of NBC Universal in 2013. Deals like this destroy democracy, he said.
It is unlikely the proposed deal, which reportedly values Time Warner at $105 a share, would clear regulatory hurdles before the end of 2017.
Telecoms companies are increasingly seeking to buy into cable TV providers and content producers, in order to offer more extensive packages to consumers. AT&T spent $48bn buying the satellite TV provider DirecTV last year, making it the countrys largest pay-TV provider, with 25 million customers. The company has also spent hundreds of millions improving its infrastructure to give consumers a better experience watching video content on their mobile phones.
Buying Time Warner would give AT&T, which has a market value of $226bn, access to the Harry Potter and Batman film franchises as well as hit TV shows such as The Big Bang Theory and Game of Thrones.
The rival telecoms company Verizon is in negotiations to buy Yahoo and has already bought AOL, owner of the Huffington Post.
The AT&T-Time Warner deal vindicates Time Warners chief executive, Jeff Bewkes, decision to turn down a $85-a-share takeover approach from 21st Century Fox two years ago. Shares in Time Warner jumped 8% to $89.48 on Friday, when speculation about the proposed deal was first reported.
Brian Wieser, lead researcher at the analytics firm Pivotal, said the deal would present the new entity with potentially insurmountable difficulties.
Wieser said that while the marriage of a producer and a distributor might at first look similar to the successful Comcast, following its purchase of NBC Universal, an AT&T-Time Warner entity would present unique challenges. Other entities, he said, made more sense for the always-a-bridesmaid Time Warner.
DirecTV and Time Warner in a lot of ways is more similar than Time Warner and AT&T, he said. It looks like a hedge against the commoditization of infrastructure.
Cash-rich telecoms companies such as AT&T are facing a crisis as their wireless businesses reach maturity and fixed-line income continues to erode.
AT&T is an acquisition machine and interested in empire preservation if nothing else, said Wieser.
Time Warner has always been for sale at the right price. Its not a position that creates any synergies and it does create some dis-synergies, like the problem of managing a global media company from Texas. Its a standalone entity that gets lost when its part of a much bigger conglomerate.
AT&T faces tough choices, said Wieser: If the prospects for wireline growth are negative and the prospects for wireless growth tepid, what do you do to make sure your business grows?
Time Warner, too, faces problems. The trend of cord-cutting people getting TV over the internet has eaten into the cable subscriptions that are vital to its networks.
There is also increasing competition from players such Netflix, Amazon Prime and Googles YouTube. In August, Time Warner bought a 10% stake in the streaming service Hulu.
Read more: https://www.theguardian.com/media/2016/oct/22/att-buy-time-warner-donald-trump
