Late Friday, Reuters said that AT&T will pay $110 a share in cash and stock to fill its satellite, phone and mobile pipelines with content from Time Warner units including HBO, CNN and Warner Bros.
Buying Time Warner also brings extensive rights to sports, including the NBA, Major League Baseball and college basketball’s March Madness at a time when traditional cable operators are losing subscribers to cord cutting and cord shaving. New over-the-top distributors are springing up looking to attract viewers with skinnier, cheaper bundles of TV programming that spares consumers from expensive equipment and long-term contracts.
The changing environment have media companies engaged in talks with old and new distribution partners as they try to create additional value for current subscribers and create new offerings that might appeal to those who currently aren’t part of the pay-TV world.
Time Warner recently bought a stake in Hulu, the streaming service also owned by Walt Disney Co., 21st Century Fox and Comcast.
AT&T has recently strung together agreements with numerous partners for an upcoming web-delivered programming service from its DirecTV unit. Meanwhile, Time Warner reportedly had been engaged in talks with Apple about a possible merger.
The AT&T-Time Warner deal would bring a major content company together with one of the largest distributors of video content. Ironically, Time Warner a few years ago split itself from Time Warner Cable and AOL in order to focus on producing high-quality content. Time Warner rejected an $80 million offer from Rupert Murdoch’s 21st Century Fox in 2014.
News of AT&T's bid sent the stocks of other programmers higher, riding a wave of potentilal consolidation. Those included Discovery Communications, Scripps Networks Interactive and AMC Networks.
Assuming a deal can be finalized, it is expected to face lengthy reviews by both the FCC and the Department of Justice, which has expressed concerns about consumers being squeezed when content owners and distribution platforms attempt to vertically integrate.