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TIME WARNER ACQUISITION BY AT&T BECOMING A REALITY?

by Kevin Schoon August 10, 2017
At&t

It was just last year when we heard the announcement AT&T was looking to acquire the media giant Time Warner. Now it seems it’s all coming to a head pending the approval of the Department of Justice. What has this done for the stock? Well, Time Warner (TWX) is up to $102.28 after the closing bell today. That’s up from 86.00 per share back in November prior to the announcement.

The Goal

As for AT&T (T) analyst expect $42 price target. This is according to Forbes. To raise funds for the deal, AT&T has sold 22.5 million in bonds. Such an acquisition is expected to jolt some life into the AT&T stock which hasn’t had much movement. Since the announcement the stock has traded as high as $42 and low as $36. As of today it sits right in the middle at $38.36.

So what does AT&T expect to gain from such an acquisition? AT&T is looking to merge its wired and wireless platforms with Time Warner’s diverse entertainment assets. This puts the company in position to have better leverage when bargaining for other content from other companies as well as help the wireless company distribute content over its own media platforms. In my opinion, it’s likely we can start to see a trend with wireless companies merging with other media outlets to keep up with an ever-growing and evolving industry. Long gone are the traditional methods of absorbing information. Due to the constant thirst to have information at our fingertips this could help AT&T keep up with the industry leader Verizon (VZ).

Randall Stephenson

AT&T’s CEO Randall Stephenson will not be moved.

The  Concerns

While this merger’s likeliness to happen is favorable news  for both parties, it has not been without speculation. It was reported by Brian Fung (Washington Post), that despite President Trump’s threat to block the merger because of his clashes with cable news behemoth, CNN will still remain independent and part of the deal. Also while it was speculated CEO Randall Stephenson’s job would be affected, he has cut the chatter short by stating the following:”I will not be changing my title,” Stephenson added. “I’ll still be CEO. This was according to a Bloomberg report.

 

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