The news that senior executives from AT&T Inc. and Time Warner Inc. have been meeting in recent weeks to discuss the possibility of a merger between the companies as part of their latest business strategy. Thus far the talks are informal, but the news came right before reports that Time Warner Inc stocks rose by as much as 9.5 percent in New York valuing the company at about $67.5 billion while AT&T’s fell 2 percent.
Telephone giant AT&T Inc already made huge strides in their business when the acquired satellite television service DirectTV and now seems to be setting its sights on Time Warner Inc., an unarguably bigger prize. Warner Bros. owns numerous giants in the television studio industry including HBO, CNN, and Cartoon Network.
If such a deal were to go forward, it would transform the Dallas-based AT&T into something of a colossus in the communications and entertainment industry. The company is already the owner of multiple distribution outlets which includes the nation’s largest mobile phone networks as well as some of the most prestigious television channels in the business. Warner Bros. will also bring a treasure trove of classic characters including those from the DC Comics and cartoon characters such as Scooby-Doo and the Looney Tunes.
In 2014 Bewkes and his board had been approached by Rupert Murdoch’s 21st Century Fox Inc. and rejected an $85-a-share approach. They had valued the Time Warner Inc at more than $75 billion. According to Bloomberg, however, a person who is close to the Chairman and Chief Executive Officer of Time Warner, Jeff Bewkes, says that he is a willing seller at this time but only if the offer presented to him is fair. Another person who is close to the situation says that Chairman and CEO of AT&T, Randall Stephenson, is reportedly seeking to add more content and original programming to those that the telecommunications company is currently providing.
There are plenty of persons who are invested in this merger not happening however, and that should be everyone who is a customer of either company. One of the two giants already has a near monopoly over cable TV provision while the other owns numerous companies who are the creators of the content that would be broadcasted, it would be a great business move. Profits for TV providers has been on the decline and Netflix showing that the best investment for recovery is in content creation instead of infrastructure, a merger is a good option for AT&T.
In some ways a merger to create an AT&T-Time Warner would be a rival and mirror of cable giant Comcast, which is the owner of NBC Universal, but on an even bigger scale when considering that AT&T has an even bigger mobile phone operation. AT&T is already operating the largest pay-TV service in the nation with over 25 million customers. As BGR wrote, a merger would mean that AT&T and Time Warner would then have over 50 percent market share and for anyone who knows that competition between companies matter for lower, better costs, this is a nightmare.
The main thing standing in the way of this merger is regulation, anti-competition regulators, in fact, as well as the FCC. It is highly unlikely that they would agree to the creation of one company with that much of a monopoly. Of course, the regulators allowed Charter’s takeover of Time Warner Company just last year, which means that anything is really possible — they too became a powerhouse merger.
Time Warner has been aggressively pushing into the digital media arena in the most recent years and just launched HBO Now nearly 18 months ago. Over the summer, Time Warner also took a passive 10 percent stake in Hulu, which is owned by the likes of NBC Universal, 21st Century Fox, and Disney.
Representatives of both AT&T and Time Warner declined to provide a comment.
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