AT&T Agrees to Buy Time Warner for Around $80 Billion

AT&T Agrees to Buy Time Warner for Around $80 Billion
By MICHAEL J. de la MERCED OCT. 22, 2016

AT&T has agreed to buy Time Warner for more than $80 billion, a person briefed on the matter said on Saturday, a move that would create a new colossus in the worlds of media and telecommunications.

The proposed transaction could be announced as soon as Saturday, barring last-minute changes, this person added.

Putting together AT&T, a sprawling video and internet empire that encompasses cellphone and cable service along with DirecTV, and Time Warner’s media holdings, which include HBO, CNN and the movie studio Warner Bros., would create a formidable new player and potentially spur even more deals. In recent weeks, the family that controls CBS and Viacom has urged the two companies to consider a merger.

Executives and advisers to both companies have held talks for several months, with the discussions becoming more serious over recent weeks.

The potential union would probably face heavy scrutiny from government regulators, who have shown increasing skepticism about such mega-mergers.

An announcement would come weeks before the presidential election, with both candidates having promised to crack down harder on big deals. Hillary Clinton has said that she intends to bolster the government’s antitrust enforcement divisions.

And during a rally on Saturday, Donald J. Trump said of a tie-up of AT&T and Time Warner, “Deals like this destroy democracy.”

AT&T and Time Warner were not immediately available for comment.

News of the agreement was reported earlier by The Wall Street Journal.

The deal is known as a vertical integration of a distribution company and a content company. The last comparable merger was Comcast’s $30 billion deal for NBC Universal in 2009. The review of that acquisition involved the Justice Department and the Federal Communications Commission, and the deal was approved.

Because Time Warner and AT&T do not traditionally compete against each other, the argument against the deal would be that a combination would reduce choices for consumers. Any concerns over how AT&T, which recently bought DirecTV, would treat Time Warner programs like HBO’s “Game of Thrones” or cable networks like CNN could be addressed in conditions attached to an approval.

“There is not a great theory of harm to block the deal,” said Jonathan Chaplin, an analyst at New Street Research.

Buying Time Warner would be one of the biggest takeovers by AT&T, one of the former so-called Baby Bells that arose from the 1982 breakup of the original AT&T. Based in Dallas, the company has struck hundreds of billions of dollars worth of acquisitions.

AT&T has also made other moves to acquire content. It has set up a joint venture with Peter Chernin, a prominent media executive, and the company was one of the bidders for Yahoo this year.

For Time Warner, a takeover by AT&T would cap years of deals that sold off assets including Time Warner Cable, most of the publications of Time Inc., and AOL, the once-powerful internet provider whose original takeover of Time Warner signaled the height of the dot-com boom.

Two years ago, Time Warner resisted a takeover bid by Rupert Murdoch’s 21st Century Fox.

If AT&T completes a takeover of Time Warner, it would probably prompt an acceleration of deal-making in the media industry, as other content companies seek partners to expand and regain some negotiating leverage with the huge service providers.

Cecilia Kang contributed reporting.

A version of this article appears in print on October 23, 2016, on page A1 of the New York edition with the headline: AT&T Reaches $80 Billion Deal On Time Warner


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