AT&T agrees to buy Time Warner for $85bn in a move to create a new media behemoth

The Time Warner Center

Telecoms giant AT&T has agreed to buy Time Warner for $85.4bn (£70bn) in a deal poised to create one of the world’s largest media companies.

If approved by regulators, the deal will give the US’s second largest wireless telecoms company control of TV channels HBO, CNN and Cartoon Network and film studio Warner Bros, producer of the Batman and Harry Potter film franchises, and therefore access to a wealth of coveted content to stream across its network.

"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, chairman and chief executive of AT&T.

But although it was unanimously approved by the boards of both companies on Saturday, the biggest deal in the world this year is expected to face fierce regulatory scrutiny over concerns that such a strong grip on content and its means of delivery could drive up costs and reduce choice for consumers.

Donald Trump, whose presidential campaign has railed against ‘mainstream media’ organisations such as CNN, has already said he will block the deal if he is elected to the White House. “As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.”

AT&T, however, has said it does not anticipate the acquisition will be blocked by government and expects the deal to be concluded by the end of 2017.

If it is given the green light, it will mark the most significant step yet in the reinvention of telecoms companies as media behemoths, following Verizon’s $4.8bn deal to acquire Yahoo, AT&T’s own purchase of satellite provider DirecTV and mobile carriers such as Telefonica reimagining themselves as media owners and ad platforms in their own right.

According to Reuters, AT&T’s main wireless and broadband service business is “showing signs of slowing”, which goes some way to explaining the appeal of marrying content and infrastructure in a single company in an era when consumers are cherrypicking the news and entertainment they receive and are increasingly consuming it on the move.

As it said in its own statement on the deal, AT&T wants the new company to "lead the next wave of innovation in converging media and communications industry".

It will also be heralded as a symbol of the dramatic consolidation foretold by Vice co-founder Shane Smith, who predicted a media “bloodbath” in 2017.

"What you’re going to see is a mergers and acquisitions frenzy where the last two or three big boys buy the last scale plays to say: 'We’ve got digital, we’ve got mobile, so we’re smart.' And the digital guys are going to go, 'fuck thank god, we’ve finally got money,'" Smith said at the Edinburgh International Television Festival earlier this year.

AT&T will pay $107.50 for each Time Warner share in a combination of cash and stock. Time Warner chief executive Jeff Bewkes had previously rejected an $80bn offer from Rupert Murdoch’s Twenty First Century Fox in 2014.

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