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Is the AT&T–Time Warner Deal Close to Being Realized?

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AT&T to acquire Time Warner

AT&T’s (T) has proposed an acquisition of Time Warner (TWX) in a stock-and-cash transaction valued at $107.50 per Time Warner share. The proposed transaction is subject to approvals by Time Warner’s shareholders, regulatory approvals, and other customary closing conditions.

Compared to AT&T’s failed horizontal integration with T-Mobile (TMUS) in 2011, AT&T appears confident in this acquisition due to its distinctive vertical integration with Time Warner.

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Quick look at past successful deals

Charter (CHTR) recently acquired Time Warner Cable for ~$60 billion. The DOJ (Department of Justice) approved the deal in 2016, as it didn’t view the scale of the merged company as sufficient enough to tip the market the way the Comcast–Time Warner Cable combination could have. 

Comcast’s (CMCSA) attempt to acquire Time Warner Cable for ~$45 billion failed due to strong regulatory objections. It was believed that the combined companies would reduce competition, as they directly competed in each other’s markets.

AT&T’s acquisition of satellite TV provider DirecTV for ~$49 billion received regulatory approval after more than a year of review. Through its DirecTV acquisition, AT&T has become the leading pay-TV player in the United States with 25.3 million subscribers, surpassing Comcast’s subscriber base.

Comcast’s acquisition of a 51% stake in NBCUniversal from General Electric (GE) was approved by the FCC (Federal Communications Commission) after a 13-month review. Comcast, a leading cable distributor, wanted to own entertainment and news cable channels.

The AT&T–Time Warner deal will create a vertically integrated company in the content and distribution market, rather than the horizontal integration of a direct competitor, which would be more problematic from a regulatory standpoint.

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