AT&T is in advanced discussions to acquire media conglomerate Time Warner, and a deal could come as early as this weekend, the Wall Street Journal reported on Friday.
The talks have come together quickly and revolve around a cash-and-stock deal which would be one of the largest in the sector in recent years as telecom companies make a grab for media providers to acquire content, the Journal reported.
Time Warner shares jumped 11.4 per cent to $92.40 in late Friday morning trading. AT&T shares were down 3.3 per cent at $37.39.
Time Warner, which has a market capitalisation of about $65 billion, is an attractive target for AT&T, which has a market capitalisation of about $238 billion, because of its premium cable channel HBO, the CNN news network, film studio Warner Bros and other media assets.
AT&T, which sells wireless phone and broadband services, has already made moves to turn itself into a media powerhouse, buying satellite TV provider DirecTV last year for $48.5 billion.
Leverage
Owning content gives cable and telecom companies leverage as customers demand smaller, hand-picked cable television offerings or dispense with cable altogether and watch shows via the internet.
Time Warner chief executive Jeff Bewkes has not been willing to sell the company in the past. The company rejected an $80 billion offer from Twenty-First Century Fox in 2014.
Time Warner was not immediately available for comment. AT&T declined to comment.
Bloomberg reported on Thursday that executives of both companies had discussed various business strategies, including a possible merger, in recent weeks.
The mooted deal could fire the starting gun on a fresh round of media and technology industry consolidation and comes as content companies like Time Warner grapple with a distribution landscape in flux, with television viewers drifting away from cable and satellite television towards online and mobile alternatives.
For AT&T, owning Time Warner would give it exclusive content that would “help its competitive positioning” against rivals in wireless telephony, such as Verizon, T-Mobile US and Sprint, said Amy Yong, analyst with Macquarie Securities.
The proposed combination of Time Warner with a technology company is not a new idea and has echoes of AOL’s disastrous $164bn purchase of Time Warner in 2000 — widely regarded as the worst corporate deal in history.
