On Saturday, the company announced via a press release that it would buy Time Warner for nearly $86 billion:
The deal combines Time Warner's vast library of content and ability to create new premium content that connects with audiences around the world, with AT&T's extensive customer relationships, world’s largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution.
In a lengthy statement, AT&T’s chairman and chief executive, Randall Stephenson, said the deal would give consumers “unmatched choice, quality, value and experiences”:
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. Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We’ll have the world’s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that. We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.
… Time Warner’s leadership, creative talent and content are second to none. Combine that with 100 million plus customers who subscribe to our TV, mobile and broadband services – and you have something really special. It’s a great fit, and it creates immediate and long-term value for our shareholders.
Time Warner’s chairman and chief executive, Jeff Bewkes, delivered an equally upbeat statement about the proposed deal:
This is a great day for Time Warner and its shareholders. Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis and to capitalize on the tremendous opportunities created by the growing demand for video content. That’s been one of our most important strategic priorities and we’re already making great progress — both in partnership with our distributors, and on our own by connecting directly with consumers. Joining forces with AT&T will allow us to innovate even more quickly and create more value for consumers along with all our distribution and marketing partners, and allow us to build on a track record of creative and financial excellence that is second to none in our industry. In fact, when we announce our 3Q earnings, we will report revenue and operating income growth at each of our divisions, as well as double-digit earnings growth.
This is a natural fit between two companies with great legacies of innovation that have shaped the modern media and communications landscape, and my senior management team and I are looking forward to working closely with Randall and our new colleagues as we begin to capture the tremendous opportunities this creates to make our content even more powerful, engaging and valuable for global audiences.
The deal would essentially put AT&T, Bell South, Time Warner, Turner, TBS, CNN, HBO, Warner Bros., DirecTV and more under one roof and signifies a continued move toward media industry consolidation.
The New York Times reported that the new company “will in some ways look more like a bank than a media conglomerate” because of the level of debt that it would take on. AT&T last year bought DirecTV for nearly $50 billion.
Lawmakers’ adverse reaction
Opposition to the deal came swiftly.
Politicians on both sides of the aisle and industry insiders have questioned the deal’s merits and whether the merger, which would combine AT&T’s wireless and pay-TV subscribers with Time Warner-owned networks and programmers, would stifle competition.
At issue is whether AT&T, with over 100 million subscribers across its wireless, broadband and DirecTV offerings, will somehow favor its own customers when it comes to HBO, CNN and Warner Bros. properties like the Batman and Harry Potter franchises.
Some consumer rights advocates also questioned how AT&T will use the viewership data that it gathers from its subscribers, particularly if the Time Warner acquisition drives more consumers to AT&T’s services.
Republican presidential nominee Donald Trump opposed the deal at a public rally, saying that it would put “too much concentration of power in the hands of too few.” Democratic presidential nominee Hillary Clinton, said through a spokesman that she “certainly thinks regulators should look at it.”
Sen. Bernie Sanders tweeted his opinion:
The administration should kill the Time Warner/AT&T merger. This deal would mean higher prices and fewer choices for the American people. https://t.co/S8c4ldDqhi
— Bernie Sanders (@SenSanders) October 23, 2016
Several lawmakers—including the bipartisan leadership of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights—have also weighed in with their opposition.
Stephenson seemed unconcerned, however.
The Wall Street Journal reported:
[Stephenson] played down the objections from lawmakers, politicians and industry groups, arguing the combination of a content provider and a distributor didn’t increase industry concentration and wasn’t the kind of deal regulators take issue with.
“It is going to have to go through a regulatory review process that is dictated by rules, regulations and laws,” Mr. Stephenson said in an interview. “I can’t control what the politicians say and feel about it.”
Stephenson was also adamant that the deal would not hinder the editorial independence of Time Warner’s news channels.
The Wall Street Journal reported:
AT&T affirmed Sunday that it would continue to run Time Warner’s media assets autonomously amid concerns among current and former staff particularly at CNN that editorial independence might be compromised. “CNN is an American symbol of independent journalism and First Amendment free speech. My board and I are clear—CNN will remain completely independent from an editorial perspective,” Mr. Stephenson said in a statement.
Despite the opposition, many analysts expect that the deal eventually will go through. When Comcast and NBC-Universal joined forces, the company agreed to conditions that ensured rivals would have access to their properties.
Ensuring the deal’s completion won’t be easy. One analyst told Bloomberg that she expects there will be “a multi-front war” to get the deal approved.
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