15 June 2018
| Natalie Bannerman
AT&T has officially closed its $85 billion acquisition of Time Warner, a mere two days after the transaction was approved by a federal judge.
The newly formed company will make
AT&T a key player in the North American content space,
adding to its existing dominance in video, mobile and broadband
"The content and creative talent at Warner Bros, HBO and
Turner are first-rate. Combine all that with
AT&T’s strengths in direct-to-consumer
distribution, and we offer customers a differentiated,
high-quality, mobile-first entertainment experience," said
Randall Stephenson, chairman and CEO of AT&T.
"We’re going to bring a fresh approach to how the
media and entertainment industry works for consumers, content
creators, distributors and advertisers."
Structurally the new company will operate under four key
divisions. AT&T Communications, which
provides mobile, broadband, video and other communications
services to US, AT&T’s media
business which will consist of the newly acquired
HBO, Turner and Warner Bros, AT&T
International which will provide mobile services in
Mexico, plus pay-TV service across 11 countries in South
America and the Caribbean and AT&T’s
advertising and analytics business which provides
marketers with advanced advertising solutions.
A new executive management team has also been put in place
with John Donovan, still at the helm as CEO of AT&T
Communications. John Stankey as CEO of
AT&T’s media business, Lori Lee as CEO of
AT&T International and Brian Lesser as CEO of
AT&T’s ad and analytics business.
Jeff Bewkes, the former chairman and CEO of Time Warner,
will stay on with the company as a senior advisor during a
transition period. Bewkes previously stated that he would step
down from the position of chairman and CEO upon completion of
"Jeff is an outstanding leader and one of the most
accomplished CEOs around. He and his team have built a global
leader in media and entertainment. And I greatly appreciate his
continued counsel," said Stephenson.
The final financial breakdown of the transaction shows that
Time Warner shareholders received 1.4 shares of AT&T common
stock, in addition to $53.75 in cash, per share of Time Warner.
As a result, AT&T issued 1,185 million shares of common
stock and paid $42.5 billion in cash.
The deal is set to produce $2.5 billion in increased
synergies and AT&T says it will begin consolidating Time
Warner results as of 15 June 2018.
The $85 billion deal has been two years in the making and
tumultuous to say the least. Back in December the US Justice
Department launched legal action in order to block the
merger. At the time the department said that the merger
would reduce competition and potentially lead to higher
consumer prices by concentrating too much control of media
properties under one company.
The DoJ claimed in its complaint AT&T would have the
"incentive and ability" to charge rivals "hundreds of millions
of dollars more" for the right to distribute content from major
Time Warner properties including HBO and CNN.
But a few days ago the acquisition was approved by federal
judge Richard Leon of United States District Court in
Washington. Leon ruled that the DOJ could not prove that the
acquisition would lead to fewer choices for consumers and
higher prices for television and internet services.
Interestingly it was the positive outcome of the case that
prompted Comcast to make a new all-cash offer of $65 billion
for Rupert Murdoch's Twenty-First Century Fox.