Analysts Weigh Pros and Cons of AT&T-Time Warner Deal

By Todd R. Weiss  |  Posted 2016-10-24 Print this article Print
AT&T, Time Warner, acquisition, Yahoo, Verizon, mobile carriers, streaming content, DirecTV, entertainment

Akshay Sharma, an analyst with Gartner, said that AT&T's move to add Time Warner's content to its growing offerings will provide an additional differentiator for customers to choose the company and its products over those of competitors.

In fact, I think this actually fosters competition," said Sharma, because "it allows AT&T to become an over-the-top provider and allows AT&T to be more like a Netflix."

Under the deal, AT&T will acquire Time Warner in a stock-and-cash transaction valued at $107.50 per share. The agreement has been approved unanimously by the boards of directors of both companies.

"This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers," Randall Stephenson, the chairman and CEO of AT&T, said in a statement. "We'll have the world's best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that."

The merger is subject to approval by Time Warner shareholders and review by the U.S. Department of Justice, AT&T stated. 

If the deal is ultimately approved, the merger would join AT&T's wireless, broadband and satellite TV offerings together with entertainment content from Time Warner, including its TNT, TBS, CNN and HBO cable networks, as well as its Warner Bros. film and TV studio.

Similar combinations and proposals of bringing together wireless carriers and entertainment or cable companies have been in vogue in recent years.

In July, Verizon announced a $4.83 billion deal to acquire search company Yahoo that is still in the process of being completed. In September, AT&T said that its previously announced DirecTV Now video streaming services will launch in the fourth quarter of 2016, bringing the carrier's wireless customers more options for receiving television programming at will.



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