AT&T’s $85bn Time Warner takeover bid faces scrutiny

AT&T, the giant US telco, which has announced its intention to buy entertainment group Time Warner for nearly $85bn (£70bn) is facing a Senate competition subcommittee hearing into the deal in November.

Senator Mike Lee, a Republican who chairs the US Senate antitrust subcommittee, has confirmed the proposed takeover “potentially raises significant antitrust issues, which the subcommittee will carefully examine”.

The proposed $86bn Time Warner takeover, one of the biggest deals of 2016 so far, is subject to regulatory approval. If successful AT&T has said it does not expect the deal to close before the end of 2017.

Time Warner, which makes the hit HBO show Game of Thrones, rejected an $80bn offer from Twenty-First Century Fox Inc two years ago. It is understood to be considering this latest approach.

AT&T proposes to pay $107.50 for each Time Warner share, in a combination of cash and stock, worth $85.4bn overall, according to a statement. The firm has previously indicated its desire to become a media powerhouse when it purchased satellite TV provider DirecTV last year for $48.5bn.

If the takeover goes through, it would combine AT&T’s distribution network with content from HBO, the Warner Brothers film studios, CNN and other such material from Time Warner, but it has raised fears the telco would control too many shows and potentially restrict choice.

“This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers,” said AT&T chair and chief executive, Randall Stephenson, however, in a statement. He added optimistically that he didn’t envisage any regulatory obstacles and that any concerns could be overcome if concessions were made.

There are fears the deal would concentrate too much media power, as AT&T is already the third largest cable TV provider in the US, plus it owns mobile phone and broadband networks. A link-up would effectively give it a vertical platform if it takes over Time Warner, with consumers possibly restricted in their future choice over content and price.

Donald Trump, the Republican presidential candidate, has said that if he is elected, he would block the deal, reportedly saying on Saturday (before the deal was formally confirmed) that: “It’s too much concentration of power, in the hands of too few.”

AT&T presently has a market value of about $238bn. Rival such Comcast and Verizon are no doubt watching the deal closely. The latter is currently in negotiations to buy Yahoo, with the price under pressure after its recent huge data breach. Verizon has already purchased AOL, owner of the Huffington Post.


Related reading