AT&T would have a selection of popular programs on TV networks such as HBO and the Cartoon Network if it were to acquire Time Warner
Senior executives at AT&T Inc and Time Warner Inc have met in recent weeks to discuss various business strategies including a possible merger, according to people familiar with the matter.
The talks, which at this stage are informal, have focused on building relations between the companies rather than establishing the terms of a specific transaction, the people said, asking not to be identified as the deliberations are private. Neither side has yet hired a financial adviser, the people said.
Acquiring Time Warner would give AT&T, one of the biggest providers of pay-TV and of wireless and home Internet service in the US, a collection of popular programming to offer to subscribers, from HBO to NBA to the Cartoon Network.
“There’s a lot that’s attractive about Time Warner,” said media industry veteran Peter Chernin, who runs an online video joint venture with AT&T, in an interview on Thursday on CNBC. “I think they’re both great companies.”
He said he did not know anything about a deal.
Time Warner chief executive officer Jeff Bewkes is a willing seller if he gets an offer he thinks is fair, one of the people said.
Bewkes and his board rejected an US$85-a-share approach in 2014 from Rupert Murdoch’s 21st Century Fox Inc, which valued Time Warner at more than US$75 billion.
Representatives for AT&T and Time Warner declined to comment.
AT&T chief executive officer Randall Stephenson has been looking to add more content and original programming as part of his plan to transform the Dallas-based telecommunications company into a media and entertainment giant.
The company’s plan to focus on media and entertainment include companies worth US$2 billion to US$50 billion, people familiar with the plans said earlier this month.
Last year, AT&T paid US$48.5 billion to acquire satellite-TV provider DirecTV, its biggest deal in at least 10 years, according to data compiled by Bloomberg.
AT&T has been developing an Internet-based version of the pay-TV service, called DirecTV Now.
“With the pending launch of the DirecTV Now OTT app, it might make sense to move onto content ownership, but Time Warner is an awfully big first step into the content world,” Bloomberg Intelligence analyst John Butler said in an e-mail.
The results are mixed with blockbuster deals that bring outsiders into the media industry. Comcast Corp has had a largely successful run since acquiring control of NBCUniversal in 2009, but Time Warner itself had one of the most disastrous mergers of all time when it combined with America Online Inc in 2000.
With US$7.2 billion of cash on hand, AT&T does not have enough firepower to make a big deal with cash alone. In the wake of the DirecTV purchase and the US$18 billion it spent in the US federal airwave auction last year, AT&T’s net debt was US$120 billion at the end of June.
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