In one of the biggest media mergers of all time, AT&T and Time Warner have agreed to an $85 billion deal.
The acquisition, which was announced on Saturday, will enable AT&T to expand beyond being a telecommunications company and allow it to offer Time Warner's wealth of content to its customers, as it is currently the parent company of CNN, TNT, HBO and Warner Bros.
AT&T will pay $107.50 per share of Time Warner's stock which is a large premium compared to what the stock was trading for the previous week. Overall the deal is valued at $109 billion when the media company's debt is taken into account.
According to Time Warner CEO Jeff Bewkes and AT&T CEO Randall Stephenson, the two companies have been in talks since August regarding the upcoming acquisition. Stephenson explained the reasoning behind the deal further, saying: “We have a very common view of the world. This thing just had what we called gravity. We started negotiating the terms very quickly.”
AT&T is poised to gain a lot from the deal as it will be able to diversify its business beyond wireless and internet services. The move will allow the telecommunications company to enter into the business of entertainment, news and sports. Controlling both communication and content will give AT&T the ability to determine the future of media. Speaking of the future, the company noted that “the future of mobile is video, and the future of video is mobile.”
The deal between the two companies will also prevent Time Warner from being acquired by any of AT&T's rivals which include Verizon, Comcast and Apple. However, it will likely take government regulators a year to approve the $85 billion deal.
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