It’s like we’re living in 2000 all over again. A blockbuster deal involving Time Warner might be happening soon.
Time Warner, according to Bloomberg and the Wall Street Journal, is engaged in advanced talks to be acquired by AT&T.
It’s possible a deal is announced this weekend, preparing the alignment of AT&T’s distribution and Time Warner’s content providing.
Here’s what the Wall Street Journal says:
“The talks toward what likely would be a cash-and-stock deal have come together quickly, are fluid and still could fall through, according to people familiar with the matter. An agreement also could be delayed, they said.”
Time Warner is the owner of Warner Bros., HBO, and Turner; therefore, it’s easy to see why AT&T would want to acquire them. AT&T would gain ownership of the content one of its subsidiaries, DirecTV, distributes to millions of people nationwide. It’s likely more important to get HBO and Turner than it is Warner Bros. because of the DirecTV factor.
Both sides are very familiar with mergers and acquisitions, and each of them have faced heavy resistance from regulators over the years.
When the new millennium began, AOL purchased Time Warner for $165 billion in what ended up being a disastrous deal for those two companies. Verizon now owns Aol, following a corporate divorce in 2009, and Time Warner has been left figuring out what’s next ever since. 21st Century Fox actually attempted to buy Time Warner two years ago but failed with an $80 billion bid. Around the same time, the publishing arm was spun off and Time became a separate company. So Time Warner has really been bumped around in guiding its future.
AT&T’s path over the years has been rocky, too. The company failed to purchase T-Mobile in 2011 but did find somewhere else in the wireless industry to spends its money by acquiring Cricket Wireless’ parent company for $1.2 billion. Then, in 2015, DirecTV became a subsidiary of AT&T in a surprising deal valued at $48.5 billion.
If it does purchase Time Warner, AT&T would gain the ability to leverage highly valuable content across multiple platforms.
Because of the expected takeover, Time Warner’s stock price has surged to a 2016 high. AT&T’s, meanwhile, is slumping. Acquisition targets are always savored by investors.