AT&T will acquire Time Warner in a stock-and-cash transaction valuing the latter at $85 billion.
The deal combines Time Warner’s library of content and ability to create new content with AT&T’s customer relationships, pay TV subscriber base and scale in TV, mobile and broadband distribution.
“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,” said Randall Stephenson, AT&T chairman and CEO. “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.”
“Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis and to capitalize on the tremendous opportunities created by the growing demand for video content,” Time Warner Chairman and CEO Jeff Bewkes said. “Joining forces with AT&T will allow us to innovate even more quickly and create more value for consumers along with all our distribution and marketing partners, and allow us to build on a track record of creative and financial excellence that is second to none in our industry.”
With a mobile network that covers more than 315 million people in the United States, the combined company will strive to become the first U.S. mobile provider to compete nationwide with cable companies in the provision of bundled mobile broadband and video. It will disrupt the traditional entertainment model and push the boundaries on mobile content availability for the benefit of customers. And it will deliver more innovation with new forms of original content built for mobile and social, which builds on Time Warner’s HBO Now and the upcoming launch of AT&T’s OTT offering DirecTV Now.
The deal must still be approved by regulators, which won’t be easy, says Politico. It’s a transaction based on a strategically defensive response to emerging threats like Netflix and Facebook, suggests the Wall Street Journal—a hedge for both companies against all other companies, in essence.