NEW YORK — Grab some popcorn — AT&T wants to take you to the movies.
At least that’s the word on Wall Street after several reports citing unnamed sources said the giant phone company is in advanced talks to buy Time Warner, owner of the Warner Bros. movie studio as well as HBO and CNN. AT&T is said to be offering $80 billion or more, a massive deal that would shake up the media landscape.
The acquisition would combine a telecom giant that owns a leading cellphone business, DirecTV and Internet service with the company behind some of the world’s most popular entertainment, including Game of Thrones, The Big Bang Theory and professional basketball. It would be the latest in a scramble of tie-ups between the owners of digital distribution networks — think cable and phone companies — and entertainment and news providers, all aimed at shoring up businesses upended by the Internet.
SECOND TIME AROUND FOR TIME WARNER?
The Wall Street Journal reported Saturday that the boards of AT&T and Time Warner were meeting to approve the deal. Neither company returned calls requesting comment.
If the reported price holds true, it would make Time Warner the target of the two largest media-company acquisitions on record, according to Dealogic. The highest was AOL’s disastrous $94 billion acquisition of Time Warner at the end of the dot-com boom.
Regulators would have to sign off on the deal, no certain thing. The prospect of another media giant on the horizon has already drawn fire on the campaign trail. Speaking in Gettysburg, Pennsylvania, Donald Trump vowed to kill it if elected because it concentrates too much “power in the hands of too few.”
Shares of AT&T, as is typical of acquirers in large deals, fell on reports of the deal Friday, ending the day down 3 per cent.
MEDIA MERGER MANIA
Companies that provide phone and Internet connections are investing in media to find new revenue sources and ensure they don’t get relegated to being just “dumb pipes.” Verizon bought AOL last year and has now proposed a deal for Yahoo to build a digital-ad business. Comcast bought NBCUniversal in 2011.
AT&T has been active, too.
After its attempt to buy wireless competitor T-Mobile was scrapped in 2011 following opposition from regulators, the company doubled down on television by purchasing satellite-TV company DirecTV for $48.5 billion.
AT&T is expected to offer a streaming TV package, DirecTV Now, by the end of the year, aimed at people who have dropped their cable subscriptions or never had one.
The pressure on AT&T has been intense.
The venerable phone company with roots back to Alexander Graham Bell has to contend with slowing growth in wireless services, given that most Americans already have smartphones, and it faces new competitors for that business from cable companies. Comcast plans to launch a cellphone service for its customers next year.
Buying Time Warner may be “a good defensive move” against Comcast as the cable giant continues stretching into new businesses, New Street Research analyst Jonathan Chaplin said in a Friday note. Comcast also bought movie studio DreamWorks Animation in August.
POTENTIAL DOWNSIDES
Even if the AT&T deal overcame opposition in Washington, it’s possible that regulators might place so many conditions on the bigger company that the combination might not make sense.