The wireless phone and broadband service company, AT&T is trying to increase its business horizon by collaborating with the second largest cable company in the US. Reports released on Friday suggest that AT&T is in advanced talks to acquire Time Warner. If this deal materializes, analysts believe that it could be a potential blockbuster one. This will set a milestone in the convergence of media and telecommunications sector together. The deal is also one of the largest ones in the field of telecommunications in the recent years. There are rumors that the finalization of the deal might take place by the end of this weekend itself.
Deal between AT&T and Time Warner
The talks for this deal are on at a rapid pace and might be substantial as well, according to an anonymous source close to the situation. The deal will approximately be worth around $100 billion. It will result in combining distribution and content capabilities. It will replace the traditional TV packages with better streamlined offerings and online delivery. This might prove to be a major attraction for consumers.
On the release of this news, the prices of Time Warner’s shares shot up to 8%. This resulted in its market valuation of around $70 billion. On the other hand, the shares of AT&T went down by 3%. Despite this, the market value of AT&T is worth $230 billion. News sources imply the possibility of share prices after the deal from $90 to $110 per share. AT&T might end up buying the shares of Time Warner for $110, which is 25% more than its current price.
The Gabelli Multimedia Trust (GGT) is a fund which owns shares of both companies, AT&T and Time Warner. The associate portfolio manager of GGT, Larry Haverty hinted that there’s a very high possibility that these two companies might collaborate. Talks between AT&T CEO Randall Stephenson and the Time Warner CEO Jeff Bewkes have struck up serious talks to negotiate the deal for a few weeks now.
About both the companies
The deal is under scrutiny because the acquisition is a major milestone for AT&T as Time Warner is a well-established telecommunications company. It owns numerous popular TV channels like CNN, HBO, TNT, TBS, Cartoon Network, and also Hollywood’s biggest film studio, Warner Bros. It has formidable programming for various programs. This includes the Harry Potter film franchise, classic cartoon characters like Bugs Bunny, DC Comics, and blockbuster TV shows like “Game of Thrones” and “The Big Bang Theory”.
AT&T CEO Stephenson is determined to mould the company in order to keep up with the digital age. The company has already invested millions of dollars to upgrade its network infrastructure. Moreover, now customers mainly use their mobile networks to stream music and videos. In 2015, AT&T had taken over DirecTV worth $49 billion, which is the largest TV operator of US with more than 25 million subscribers. Towards the end of this year, AT&T plans to launch a streaming service christened the DirecTV Now. This service will offer a package of channels via the internet connection. It will be appealing to all the people who are planning to discontinue their cable services.