AT&T is set to face government scrutiny after agreeing an $85.4 billion deal to buy media empire Time Warner.
The US carrier announced the acquisition on Sunday (23 October), saying it will merge its distribution network including 130 million mobile phones customers and 25 million pay-TV customers, with content from Tine Warner’s assets. These include Warner Brothers film studios and the cable TV channels including HBO, the Cartoon Network and CNN.
But the deal has immediately prompted concerns in the US, with both presidential candidates raising alarms over the deal. Democratic candidate Hillary Clinton warned of a “number of questions and concerns” about the deal, while Republican nominee Donald Trump said he would block the deal should he take the White House in next month’s election.
A Senate subcommittee which oversees competition is set to hold a hearing in November to discuss the takeover, which will ultimately be ruled on by the US Department of Justice.
Announcing the deal, AT&T CEO Randall Stephenson said he was confident it will be approved by regulators as the acquisition is the “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,” he added. “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. It’s a great fit, and it creates immediate and long-term value for our shareholders.”
On top of its content divisions (Warner Bros and HBO), Time Warner also owns substantial cable TV assets through its Turner Broadcasting System division. Brands in this section include CNN, HLN, TNT, TBS and Turner Sports.
Should the deal be blocked on antitrust grounds, Time Warner could be eligible for a $500 million breakup fee.
Time Warner Chairman and CEO Jeff Bewkes said, “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.”