AT&T Inc, in a deal that could transform it into a media giant, reached an agreement to buy Time Warner Inc for $85.4billion.
The deal, which is half cash, half stock, sees the phone company agreeing to pay $107.50 per share of Time Warner’s deep media lineup including networks such as CNN, TNT, the prized HBO channel and Warner Bros. film and TV studio.
According to the Wall Street Journal, AT&T Chief Executive, Randall Stephenson will head the new company and Time Warner Chief Executive, Jeff Bewkes will leave after an interim period following the deal, a person familiar with the matter said.
AT&T is rumored to pay $500million if the deal gets blocked while Time Warner has agreed to pay $1.7billion if another person outbids AT&T’s offer.
For AT&T, the deal will help the carrier potentially find new areas of growth as its core wireless business has become saturated and its market share leaves little room for acquisitions. For Time Warner, the tie-up comes amid pressure for media companies to bulk up or join with larger entities in the face of consolidation among pay-TV distributors and viewers increasingly leaving their expensive cable packages for cheaper online streaming options.
The merging of the two companies will be a marriage of content and distribution, both in the telecommunications and media world and would rival any giant company already in place.
The transaction would be far and away the biggest media deal of recent years, potentially breathing new life into media deal-making.