What the $85 Billion AT&T-Time Warner Deal Means For You

October 24, 2016 3:48 pm  |  Comments: 0  | Views: 11047
    

Over the weekend AT&T announced they have finally reached an agreement to buy Time Warner for a whopping $85 billion. If the deal passes through regulation, the merger would combine one of the biggest distribution companies with one of the biggest TV and movies producers, in effect creating one of the most powerful media companies in the world.

The deal—in which AT&T agreed to pay $85.4 billion, or $107.50 a share, for Time Warner—was announced Saturday night, following a string of reports in recent days that a potential deal was in the works.

As America’s second-largest wireless telecoms company, AT&T mostly operates wireless, telephone and cable networks—services that are used by millions of Americans everyday.

However, if the acquisition receives approval from regulators, AT&T will gain ownership of numerous and highly valuable Time Warner media properties, including CNN, HBO, TNT and Warner Bros. movies. In other words, AT&T would gain control of a whole host of TV, movies, and sports broadcasts that people love and cherish, ranging from Game of Thrones (via HBO) to the NBA (via TNT) to all the super hero movies in the DC Comics family (via Warner Bros.).

If approved, the deal would be the biggest acquisition worldwide this year and the two companies would form one of the most powerful global media entities, which would potentially have a large impact on the overall market, as well as consumer offerings.

The proposed deal reportedly values Time Warner at $107.50 a share. (Image Credit: The Guardian)

The proposed deal reportedly values Time Warner at $107.50 a share. (Image Credit: The Guardian)

Due to fears that the deal could lead to less consumer choice, higher prices, and impede the free flow of communication, AT&T’s mammoth $85.4 billion deal to acquire Time Warner will likely face some of the toughest regulatory scrutiny in recent U.S. history of mergers and acquisitions.

Outright opposition of the deal quickly surfaced following Saturday’s announcement, particularly concerning how part of the acquisition would involve combining AT&T’s broad communications reach with Time Warner’s array of premium entertainment and media content.

Although the proposed deal is in line with other telecom companies increasingly seeking to buy into cable TV providers and content producers in order to offer more extensive packages to consumers, the size and repercussions of AT&T’s Time Warner acquisition could trigger a fresh round of consolidation between media companies who will feel under pressure to compete with such a large, unified corporation.

As such, consumer advocates are arguing that the phrase “bigger is better” does not necessarily always hold true for the end consumer, especially when applied to this latest deal.

“This combined [AT&T-Time Warner] company would have enormous power and influence over what we watch and read, how we get it, and how much we pay for it,” said Laura MacCleery, vice president of policy and mobilization for nonprofit organization, Consumer Reports. “We are going to keep digging deep into this deal and press regulators to make sure consumers don’t get slammed.”

Despite the opposition and potential for harsh regulatory scrutiny, AT&T CEO Randall Stephenson says he does not anticipate government blocking the acquisition, which the company says is expected to go through by the end of 2017.

But even if the deal doesn’t happen, AT&T has already indicated through other actions that the company wants a piece of the future of entertainment. One of the biggest and most recent moves AT&T has made toward this ambition was its merger with DirecTV in 2015. With plans to launch its own  own streaming TV service—DirecTV Now—by the end of 2016, AT&T’s ultimate goal is to provide all DirecTV content over the internet without the need for a satellite dishes and to become the primary TV platform by 2020, according to Bloomberg. 

Sources: Bloomberg, The Guardian, USA Today

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