Mon, Oct 24, 2016 - Page 1 News List

AT&T to acquire Time Warner in US$85.4bn deal

THE LITTLE GUY:Donald Trump said that he would stop the merger if elected ‘because it’s too much concentration of power in the hands of too few’

NY Times News Service, New York

An AT&T Inc sign is displayed at the company’s store in Times Square, New York, on Saturday.

Photo: Bloomberg

In the world of media, bigger remains better.

So in the wake of Comcast’s US$30 billion takeover of NBCUniversal and Verizon Communications’ serial acquisitions of the Huffington Post and Yahoo, AT&T has bought one of the remaining crown jewels of the entertainment industry.

The telecom giant on Saturday agreed to buy Time Warner, the home of HBO and CNN, for about US$85.4 billion, creating a new colossus capable of both producing content and distributing it to millions with smartphones, broadband subscriptions and satellite TV connections.

AT&T and Time Warner said both of their boards unanimously approved the deal.

Most analysts and investors have noted that Time Warner was part of one of the biggest merger follies of all time, when it sold itself to AOL at the height of the dot.com boom. That combination — also pitched on the idea of uniting content and the Internet — proved unwieldy and was later stripped apart to a few core businesses.

However, this time,the rise of online outlets such as Netflix, Amazon Prime and YouTube and the shift of younger customers from traditional media have pressured media companies to seek out consolidation partners.

These media companies are anticipating drops in fees from cable service providers and declining revenue from advertisers. Getting bigger would give them more negotiating leverage with both service providers and with advertisers.

Among their top priorities is finding new ways of reaching consumers. For example, HBO offers its HBO Now service to deliver shows such as Game of Thrones and Westworld to consumers who do not have cable subscriptions.

Comcast’s takeover of NBC has proved a model for this new world of media dealmaking. While the cable giant has occasionally been scrutinized for possible regulatory violations, NBCUniversal has generally thrived under its current ownership, with NBC enjoying a ratings comeback and Universal delivering a range of hit films, from blockbusters such as Jurassic World to dramas such as Straight Outta Compton.

Still, Time Warner’s deal with AT&T is likely to face tough scrutiny from government regulators increasingly skeptical of power being consolidated among a few titans.

Republican US presidential candidate Donald Trump on Saturday said that he would seek to block the merger if elected, “because it’s too much concentration of power in the hands of too few.”

Over the past decade, Time Warner has spent significant time selling or spinning off AOL, many of the Time Inc stable of publications, and Time Warner Cable, which was sold to another cable operator.

The remaining businesses are HBO, one of the most-admired pay-TV channels; Warner Bros movie studios; and cable channels that include CNN, TNT, Turner Sports and TBS.

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