The wireless carrier agreed to pay $107.50 a share, evenly split between cash and stock. The companies said they expect the deal to close by the end of 2017.
AT&T Chief Executive Randall Stephenson would head the new company. The companies said Time Warner Chief Executive Jeff Bewkes would stay for an interim period following the close of the deal to help with the transition.
The combined business would pair the carrier’s millions of wireless and pay-television subscribers with Time Warner’s deep media lineup, which includes networks such as CNN, TNT, the prized HBO channel and Warner Bros. film and TV studio. It furthers AT&T’s bet that television and video can drive growth into a stalled wireless market.
“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,” Mr. Stephenson, 56 years old, said in a release.
The companies said they aim to be the first U.S. wireless company to compete nationwide with cable companies by providing an online-video bundle akin to a traditional pay-television package. “It will disrupt the traditional entertainment model and push the boundaries on mobile content availability for the benefit of customers,” the companies said.
For Time Warner, the deal represents a victory for Mr. Bewkes, 64, who took some heat from investors for rebuffing a takeover bid two years ago from 21st Century Fox at $85 a share. (21st Century Fox and Wall Street Journal-owner News Corp share common ownership.)
Competitors are likely to sound alarms about the scale of the combined company to possibly extract concessions during the review. Walt Disney Co. Chief Communications Officer Zenia Mucha said Saturday that “a transaction of this magnitude obviously warrants very close regulatory scrutiny.”
Mr. Stephenson added that Time Warner had created an “amazing franchise” by distributing its content to many distributors, and “we don’t imagine that changing.”
The talks began in August, when Mr. Stephenson paid a visit to Mr. Bewkes at Time Warner’s New York offices. “He came to talk to me about his view of distribution going forward, and my view of content,” Mr. Bewkes said in an interview after the deal was announced late Saturday. “He said, ‘conceptually it might make sense for us to combine. Should we investigate?’ ”
The first hurdle was getting Time Warner interested in selling. The men continued discussing the possibilities with each other and talked to their boards, eventually concluding that a merger made sense, Mr. Bewkes said. (FullText)
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