AT&T has completed its USD 85.4 billion acquisition of Time Warner, and namely, of Warner Bros, HBO and Turner. The move comes two days after the company won its court case against the US Justice of Department, which objected to the deal on competition grounds. Time Warner will be consolidated into AT&T results from 15 June. The deal is expected to be accretive from year-one for adjusted earnings per share and free cash flow, with synergies seen at USD 2.5 billion. Full net debt is at USD 180.4 billion.
AT&T CEO Randall Stephenson said the purchase will allow the merged company to provide a “fresh approach” to how the media and entertainment industry works for consumers, content creators, distributors and advertisers. The CEO said AT&T can now bring together premium content, direct to consumer distribution (D2C) and high-speed networks.
With the deal now closed, AT&T has organised itself into four businesses, operating independently:
- AT&T Communications, which provides mobile, broadband, video and other communications services to US consumers and businesses;
- AT&T’s media business, made up of HBO, Turner and Warner Bros. Together, these businesses had revenues of over USD 31 billion in 2017. A new name for this business will be announced later;
- AT&T International, which supplies mobile services in Mexico to consumers and businesses, plus pay-TV service across 11 countries in South America and the Caribbean. It reported revenues of more than USD 8 billion in 2017; and
- AT&T’s advertising and analytics business provides marketers with advanced advertising services using 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.
Jeff Bewkes, the former chairman and CEO of Time Warner, will remain as senior advisor during a transition period. As previously announced, John Donovan will become the CEO of AT&T Communications, John Stankey the CEO of AT&T’s media business, Lori Lee the CEO of AT&T International, plus the group’s global marketing officer, and Brian Lesser the CEO of AT&T’s ad and analytics business.
Under the terms of the merger, Time Warner shareholders will get 1.4 AT&T shares plus USD 53.75 in cash per Time Warner share. As a result, AT&T has issued 1.185 billion shares paid USD 42.5 billion in cash. – Telecompaper