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AT&T announces it will buy Time Warner for nearly $86bn

This combination of pictures created shows ATT cell phone store in Springfield, Virginia (21 October 2016)Image copyright
AFP

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The deal is believed to be the biggest so far in the world this year

The US telecoms giant ATT has announced that it will buy entertainment group Time Warner for nearly $86bn (£70bn).

The deal was agreed at a meeting of the two boards on Saturday but will still need to be approved by regulators.

Correspondents say it is the biggest deal in the world this year.

It reflects the desire of the telecoms company to acquire content to stream over its high-speed network and attract more online viewers.

If the deal is approved by regulators, ATT would gain control of the HBO and CNN TV networks in addition to the Warner Bros film studio and other prized media assets.

ATT CEO Randall Stephenson said he did not anticipate any regulatory obstacles to the merger, saying any concerns could be overcome if concessions were made.

“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,” he said.

The deal is likely to be closely scrutinised by US antitrust regulators, as ATT is already the third largest cable TV provider in the US.

Republican presidential nominee Donald Trump has said he will block the deal if he is elected.

“It’s too much concentration of power in the hands of too few,” he said on Saturday, before the deal was confirmed.

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Helen Sloan/HBO

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Revenue from HBO, which shows Game of Thrones, contributes about 18% of Time Warner’s total revenue

ATT will pay $107.50 for each Time Warner share, in a combination of cash and stock, worth $85.4bn overall, according to a statement.

ATT said it expected to close the deal to be completed by the end of 2017.

Other media company shares, including Discovery, AMC, Netflix and CBS, recently rose as investors speculated that a deal could spark a fresh wave of takeovers and mergers among media and technology companies.

ATT, which has a market value of about $238bn, has already made moves to turn itself into a media powerhouse, buying satellite TV provider DirecTV last year for $48.5bn.

Time Warner chief executive Jeff Bewkes has, however, resisted selling in the past. The company rejected an $80bn offer from Twenty-First Century Fox Inc in 2014.

The deal gives ATT access to a major producer of content as it seeks to diversify away from its core telecoms business. Rival Verizon is currently in negotiations to buy Yahoo and has already bought AOL, owner of Huffington Post.

Some analysts, however, question whether ATT needs to mount a complete takeover of Time Warner.