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AT&T–Time Warner: Behind the Media and Telecom Consolidation Wave

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Verizon spent $4.5 billion on Yahoo buyout

In 2016, AT&T (T) agreed to spend $85.4 billion to purchase media giant Time Warner (TWX). This bid came less than two years after the company parted with $48.5 billion to bring satellite television operator DIRECTV under its wing

Earlier in 2017, Verizon (VZ) closed the $4.5 billion acquisition of Yahoo’s online assets, with the purchase coming just a few years after it spent $4.4 billion on AOL.

T-Mobile (TMUS) and rival Sprint (S) have for some time tried to merge. They have also been cited as potential wireless partners of cable and satellite providers Comcast (CMCSA), Charter Communications (CHTR), and Dish Network (DISH).

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Interest in Fox’s entertainment assets

More recently, Comcast, Verizon, and Disney (DIS) have been reported as having shown interest in acquiring a portion of 21st Century Fox’s (FOX) (FOXA) entertainment operations, especially its film and television production business. Fox’s targeted assets could cost the buyer nearly $49.0 billion, according to estimates by media analyst Michael Nathanson of MoffettNathanson.

Since President Trump’s inauguration, and since the conclusion of the spectrum auction by the FCC in early 2017, media and telecom consolidation news has intensified.

Factors in play

Some industry observers sense that the FCC under the Trump administration could be more accommodative to consolidation in media and telecom sectors. For pay-TV operators like AT&T, buying media assets could help toward lowering programming costs and countering the effects of cord-cutting. Rising content costs are pressuring profit margins for pay-TV companies.

For some companies, especially wireless operators like AT&T and Verizon, media buying is viewed as an opportunity to diversify revenue streams at a time when growth in their core wireless industry has slowed down.

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