Daily Management Review

Sources say Time Warner Agreed to be Bought by AT&T in Principle for $85 Billion


10/22/2016




Sources say Time Warner Agreed to be Bought by AT&T in Principle for $85 Billion
Giving the telecom company AT&T Inc control of cable TV channels HBO and CNN, film studio Warner Bros and other coveted media assets and paving the way for what would be the biggest deal in the world this year,, the telecom company has reached an agreement in principle to buy Time Warner Inc for about $85 billion according to sources quoted in the media.
 
In a time when telecommunications companies look to combine content and distribution to capture customers replacing traditional pay-TV packages with more streamlined offerings and online delivery, the deal, which has been agreed on most terms and could be announced as early as Sunday, would be one of the largest in recent years in the sector.
 
Through the buying satellite TV provider DirecTV last year for $48.5 billion, this company which sells wireless phone and broadband services, has already made moves to turn itself into a media powerhouse. The company has rolled out video streaming services after it entered a joint venture, Otter Media, with the Chernin Group to invest in media businesses in 2014.

Reuters reported quoting sources that AT&T will pay about $85 billion overall at $110 per Time Warner share in cash and stock. Since it only has $7.2 billion in cash on hand, it will need to line up financing to pay for the deal. And since it already has $120 billion in net debt as of June 30, according to Moody's, this could put pressure on its credit rating.
 
In the industry of movies, TV and video games, Time Warner is a major force. In addition to Warner Bros film studio, producer of the “Batman” and “Harry Potter” film franchises, its assets include the HBO, CNN, TBS and TNT. 10 percent stake in video streaming site Hulu is also owned by the company.
 
An $80 billion offer from Twenty-First Century Fox Inc was rejected by Time Warner Chief Executive Jeff Bewkes in 2014. Apple Inc approached Time Warner a few months ago about a possible merger, the Wall Street Journal reported on Friday.
 
As customers demand smaller, hand-picked cable offerings or switch to watching online, owning more content gives cable and telecom companies bargaining leverage with other content companies. And next-generation 5G networks could make a content tie-up especially attractive for wireless providers.
 
"We think 5G mobile is coming, we think 5G mobile is an epic game-changer," Rich Tullo, director of research at Albert Fried & Company, said in a note. A position to disrupt traditional pay-TV services would be achieved by mobile providers, Tullo added.
 
Time Warner its 2000 merger with AOL, is now considered one of the most ill-advised corporate marriages on record.

The strategy of buying content instead of licensing it was questioned by Cowen and Co analyst Doug Creutz.

"What does it get them that they can't get by licensing Time Warner content and at a much cheaper price than buying the whole company?" Creutz asked. What savings could be gained "from stapling distribution and content together. It's been tried. It never works" was unclear, Creutz added.
 
Regulators likely would put conditions on approval, some experts said while others said that AT&T would likely be able to win U.S. antitrust approval for the deal.
 
Government may worry about whether other cable and internet companies would continue to have access to Time Warner content like HBO and CNN, said Andre Barlow, an antitrust lawyer at the law firm Doyle.
 
(Source:www.reuters.com) 






Science & Technology

With China Set To Dominate, 1 Billion Could Be Using 5G By 2023

Deutsche Telekom unveils next gen 5G mobile antennas in Europe

Diamonds are now the new gold

Expert Body Says Driving In A Driverless Car In An Inebriated Condition Or On Drugs Should Be Legalized

SEC’s EDGAR database vulnerable to cyber threats

Research Says The Risk Of Severe Turbulence On Planes Will Increase Due To Climate Change

Barclays and CLS Group aim to replace SWIFT with blockchain

Designing Of Cars Being Done With Hologram Goggles At Ford

The Already Surging Cyber Attacks Are Set To Rise Even Further, Says A Study

Chinese to equip smartphones with OLED displays

World Politics

World & Politics

Scholar Says Political Appointees Not As Important As Financial Ones In China For The Economy

An Expected Change In Brussels Could Be Crucial For The Euro Zone

Destroying People Who Wouldn't Help One Of His Bankrupt Businesses Was All Trump Talked About When He Met Him In 1990s: Branson

Russia Is Worried About America’s Unpredictability

No oil contracts with Iraqi Kurdistan: Iraq’s oil ministry

Donald Trump lost $ 600 million during his presidency

Britain puts its weight behind Europe in the battle between Boeing and Bombardier

EU hopes to keep the Iran nuclear deal afloat