Showing posts with label Time Warner. Show all posts
Showing posts with label Time Warner. Show all posts

Thursday, June 14, 2018

AT&T completes its historic merger with Time Warner

AT&T completed its $85 billion acquisition of Time Warner Inc., bringing together global media and entertainment leaders Warner Bros., HBO and Turner with AT&T’s video, mobile and broadband networks.

“The content and creative talent at Warner Bros., HBO and Turner are first-rate. Combine all that with AT&T’s strengths in direct-to-consumer distribution, and we offer customers a differentiated, high-quality, mobile-first entertainment experience,” said Randall Stephenson, chairman and CEO of AT&T Inc. “We’re going to bring a fresh approach to how the media and entertainment industry works for consumers, content creators, distributors and advertisers.”

Under the terms of the merger, Time Warner Inc. shareholders received 1.4 shares of AT&T common stock, in addition to $53.75 in cash, per share of Time Warner Inc. As a result, AT&T issued 1,185M shares of common stock and paid $42.5B in cash.

Including net debt from Time Warner, AT&T now has $180.4B in net debt.

AT&T's new corporate structure is as follows:

AT&T Communications provides mobile, broadband, video and other communications services to U.S.-based consumers and nearly 3.5 million companies – from the smallest business to nearly all the Fortune 1000 – with highly secure, smart solutions. Revenues from these services totaled more than $150 billion in 2017. John Donovan serves as CEO of AT&T Communications.

AT&T’s media business consists of HBO, Turner and Warner Bros. Together, these businesses had revenues of more than $31 billion in 2017. A new name for this business will be announced later. John Stankey serves as CEO of AT&T’s media business.

AT&T International provides mobile services in Mexico to consumers and businesses, plus pay-TV service across 11 countries in South America and the Caribbean. It had revenues of more than $8 billion in 2017.  Lori Lee serves as CEO of AT&T International and Global Marketing Officer of AT&T Inc.

AT&T’s advertising and analytics business provides marketers with advanced advertising solutions using valuable customer insights from AT&T’s TV, mobile and broadband services, combined with extensive ad inventory from Turner and AT&T’s pay-TV services. A name for this company will be announced in the future. Brian Lesser is CEO of AT&T’s ad and analytics business.

Tuesday, June 12, 2018

AT&T expects to complete Time-Warner acquisition next week

U.S. federal judge Richard Leon ruled in favor of AT&T in the lawsuit brought by the Department of Justice to block its acquisition of Time Warner.

AT&T applauded the ruling saying it now expects to complete the $85 billion acquisition of Time Warner by June 20th.


  • The deal was first announced in October 2016.
  • President Donald Trump has argued against the deal, saying it represents too much concentration of power.
  • Time Warner, which was formed in 1990 through the merger of Time Inc. and Warner Communications, encompasses a number of premium media properties, including HBO, New Line Cinema, Turner Broadcasting System, The CW Television Network, Warner Bros., CNN, Cartoon Network, Boomerang, Adult Swim, DC Comics, Warner Bros. Animation, Castle Rock Entertainment, Cartoon Network Studios, Esporte Interativo, Hanna-Barbera Productions, Warner Bros. Interactive Entertainment. It also owns 10% of Hulu.
  • AT&T anticipates annualized cost synergies of $1.5 billion by the end of the third year after close.
  • Following the close of the Time Warner deal, AT&T plans to introduce AT&T Watch, a skinny package without local programming or sports-only channels. 
  • By the end of the year, the company also expects to launch a premium streaming experience that will compete with traditional linear TV products for in-home use. The product will be app-based with a small device that connects to customers’ TVs and home broadband. 

“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,” stated Randall Stephenson, AT&T, on the day the deal was first announced in October 2016. 

Thursday, January 25, 2018

Cable Mergers and Spinoffs - Bigger is Better?

Nearly 15 months have passed since AT&T and Time Warner announced their $109 billion-dollar merger agreement. For most of 2017, the companies were confident that their merger would pass regulatory review by the Department of Justice and by the FCC. As the first big to face scrutiny from the income Trump administration, the presumption was that regulators would take a pro-business, hands-off approach especially since the companies do not compete in the same markets and hence would not be constricting the competitive field.  The predicted completion date was “by the end of 2017.” The deadline has now passed.  The new target is “by mid-2018.” 

What’s the hold-up? In late November, the U.S. Department of Justice filed a legal case to block the proposed AT&T + Time Warner merger, apparently on the grounds that the size of the combined company will but smaller players at a competitive disadvantage. So, the logic is that bigger is better, and, as a corollary, smaller is weaker. For AT&T and Time Warner to get to that mid-2018 merger completion date will now require a legal victory in a U.S. District Court.

The official response from AT&T is this “(the) DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently” -  David R. McAtee II, Senior Executive Vice President and General Counsel, AT&T Inc. 

For network operators – bigger is better, especially with content

Since the time the proposed acquisition was announced in October 2016, AT&T has been arguing that the primary driver for the deal is to bring content and distribution under one roof. The merger will combine Time Warner's library of content and ability to create new premium content with AT&T's extensive customer relationships, world’s largest pay TV subscriber base and scale in TV, mobile and broadband distribution.

As a reminder, Time Warner, which was formed in 1990 through the merger of Time Inc. and Warner Communications, encompasses many premium media properties, including HBO, New Line Cinema, Turner Broadcasting System, The CW Television Network, Warner Bros., CNN, Cartoon Network, Boomerang, Adult Swim, DC Comics, Warner Bros. Animation, Castle Rock Entertainment, Cartoon Network Studios, Esporte Interativo, Hanna-Barbera Productions, Warner Bros. Interactive Entertainment. It also owns 10% of Hulu.

The basic idea driving the merger is for Time Warner to act as the content arm for AT&T, providing mobile and fixed broadband line subscribers with valuable material as part of a packaged service bundle. Consumers presumably would purchase an AT&T service bundle based on the perceived quality and value of the package rather than simply the lowest price for mobile connectivity. This will allow ARPU to rise and ensure a 'stickiness' factor that goes beyond the latest mobile handset deals, currently a leading cause for subscriber churn.

So, until we hear otherwise or until the courts rule that the merger is impermissible, the presumption is that “bigger is better” and that AT&T and Time Warner will continue to pursue their business combination.

A mobile + cable merger in Sweden

Earlier this week, another merger was proposed also on the premise that bigger is better. Tele2 and Com Hem agreed to a merger that will create the second largest mobile telephony and fixed broadband provider in Sweden (after Telia) and the market leader in digital TV. Com Hem’s shareholders will receive as merger consideration SEK 37.02 in cash plus 1.0374x new B shares in Tele2 for each share in Com Hem. This values the deal at about US$3.3 billion.

Com Hem operates a fiber-coax network serving approximately 1.5 million residential customers across Sweden. The company was established in 1983 and has approximately 1,200 employees. Its head office is in Stockholm.

Tele2, which was established in 1993 and is based in the Kista Science City, Stockholm, Sweden, operates an extensive mobile network across Sweden and has interests in The Netherlands, Lithuania, Latvia, Estonia, Kazakhstan, Croatia, and Germany.

The combined company will have a customer base of 3.9 million mobile customers, 0.8 million broadband customers, and 1.1 million digital TV customers in Sweden. Its 4G network will cover the entire country while its broadband network will cover almost 60 percent of Sweden’s households.
In presenting their merger to investors and to the press, Tele2 officials spoke of “evolving customer needs” and the appetite for digital content. As with the AT&T + Time Warner deal, there is an impetus to bring mobile, broadband and TV content under one roof.  

Some Service Providers are downsizing

One network operator moving in the opposite direction. Altice, the French operator led by business tycoon Patrick Drahi, who is known for ownership of his French cable operator Numericable.
Through a series of deals, in 2013 Drahi acquired SFR, France’s second largest mobile phone and internet provider from Vivendi. In late 2014, Altice acquired Virgin Mobile France for €325 million. The following year, Altice acquired Portugal Telecom and sold Cabovisão to Apax France. The hunger to grow bigger continued with a bid to acquire Bouygues Telecom, the third largest telecoms company in France. This merger was rejected by Bouygues Telecom. By then, Drahi had his sights on the U.S. cable market. In May 2015, Altice spent $9.1 billion to acquire a 70% controlling stake in Suddenlink Communications, which valued the seventh-largest U.S. cable company. This was soon followed in September 2015 with a $17.7 billion deal to acquire Cablevision, the dominant cable operator in the New York metropolitan area market. This deal was consummated in June 2016, making the new Altice USA into the #4 cable operator in the U.S. with more than 4.6 million Cablevision and Suddenlink customers across 20 states.

Many of the deals were accomplished with private equity debt. Now, 18 months after the transaction was completed, it appears that Altice has a case of indigestion. Perhaps bigger is not better, or maybe compelling content synergies have not been found across these diverse markets. Is there enough content synergy between France and New York to truly make one Altice brand?

This week, Altice N.V. announced a corporate restructuring centered on the separation of Altice USA from Altice Europe. The separation is to be effected by a spin-off of Altice NV’s 67.2% interest in Altice USA through a distribution in kind to Altice NV shareholders. Following the spinoff, the two companies will be led by separate management teams. Patrick Drahi, who will retain control of both companies, issued the following statement: “The separation will allow both Altice Europe and Altice USA to focus on their respective operations and execute against their strategies, deliver value for shareholders, and realize their full potential. Both operations will have the fundamental Altice Model at their heart through my close personal involvement as well as that of the historic founding team."



Monday, November 20, 2017

U.S. DoJ moves to block AT&T + Time Warner merger

The U.S. Department of Justice will file a legal case to block the proposed AT&T + Time Warner merger.

It has been nearly 13 months since AT&T first announced its intention to acquire Time Warner. The companies said the reason for the deal is to combine Time Warner's vast library of content and ability to create new premium content with AT&T's extensive customer relationships, world’s largest pay TV subscriber base, and leading scale in TV, mobile, and broadband distribution.

Time Warner, which was formed in 1990 through the merger of Time Inc. and Warner Communications, encompasses a number of premium media properties, including HBO, New Line Cinema, Turner Broadcasting System, The CW Television Network, Warner Bros., CNN, Cartoon Network, Boomerang, Adult Swim, DC Comics, Warner Bros. Animation, Castle Rock Entertainment, Cartoon Network Studios, Esporte Interativo, Hanna-Barbera Productions, Warner Bros. Interactive Entertainment. It also owns 10% of Hulu.

In response to the DoJ suit,  David R. McAtee II, Senior Executive Vice President and General Counsel, AT&T stated: “Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently. Our merger combines Time Warner’s content and talent with AT&T’s TV, wireless and broadband distribution platforms. The result will help make television more affordable, innovative, interactive and mobile. Fortunately, the Department of Justice doesn’t have the final say in this matter. Rather, it bears the burden of proving to the U.S. District Court that the transaction violates the law. We are confident that the Court will reject the Government’s claims and permit this merger under longstanding legal precedent.”

Monday, July 31, 2017

AT&T appointments executives ahead of merger with Time Warner

AT&T has announced a number of executive appointments in preparation for completing its acquisition of global media and entertainment company Time Warner; the transaction is currently under review by the U.S. Department of Justice and competition authorities in certain foreign countries.

Effective August 1st, the following executives will assume new positions and continue to report to AT&T chairman and CEO Randall Stephenson:

1.   In addition to her existing responsibilities as global marketing officer, Lori Lee will assume leadership of AT&T International; Ms. Lee previously led AT&T's Time Warner merger integration planning team.

AT&T provides mobile services to more than 13 million consumers and businesses in Mexico, and pay-TV service to more than 13 million subscribers across 11 countries and territories in Latin America and the Caribbean.
2.   John Stankey will assume the lead of AT&T's Time Warner merger integration planning team, working closely with Time Warner chairman and CEO Jeff Bewkes to plan for the leadership transition to Stankey as CEO of AT&T's media company on completion of the merger; Mr. Stankey was previously CEO of AT&T Entertainment Group.

3.   John Donovan, previously chief strategy officer and group president of AT&T Technology and Operations, has been named CEO of AT&T Communications, encompassing AT&T's Business Solutions, Entertainment Group, and Technology & Operations groups.

AT&T provides mobile, broadband and video services to U.S.-based consumers and serves nearly 3.5 million businesses, from small companies to most of the Fortune 1000.


Saturday, October 22, 2016

AT&T's Planned Acquisition Time Warner Focuses on Media + Communications

AT&T confirmed its intention to acquire Time Warner in a stock-and-cash transaction valued at $107.50 per share, representing a transaction value of $108.7 billion.

The companies said the reason for deal is to combine Time Warner's vast library of content and ability to create new premium content with AT&T's extensive customer relationships, world’s largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution.

Time Warner, which was formed in 1990 through the merger of Time Inc. and Warner Communications, encompasses a number of premium media properties, including HBO, New Line Cinema, Turner Broadcasting System, The CW Television Network, Warner Bros., CNN, Cartoon Network, Boomerang, Adult Swim, DC Comics, Warner Bros. Animation, Castle Rock Entertainment, Cartoon Network Studios, Esporte Interativo, Hanna-Barbera Productions, Warner Bros. Interactive Entertainment. It also owns 10% of Hulu.

“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 Randall Stephenson, AT&T chairman and CEO. “Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen. We’ll have the world’s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that."

Highlights:

  • AT&T expects the deal to be accretive in the first year after close on both an adjusted EPS and free cash flow per share basis.
  • AT&T expects $1 billion in annual run rate cost synergies within 3 years of the deal closing due to expected cost synergies primarily driven by corporate and procurement expenditures.
  • Time Warner will represent about 15% of the combined company’s revenues, offering diversification from content and from outside the United States, including Latin America, where Time Warner owns a majority stake in HBO Latin America, an OTT service available in 24 countries, and AT&T is the leading pay TV distributor.
  • Lower capital intensity — Time Warner’s business requires little in capital expenditures, which helps balance the higher capital intensity of AT&T’s existing business.
  • Regulation — Time Warner’s business is lightly regulated compared to much of AT&T’s existing operations.
  • The companies hope to close the deal by the end of 2017, pending regulatory approvals.

http://www.att.com


  • In 2000, AOL purchased Time Warner for US$164 billion. The merger was unwound in 2009.


See also