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Massive AT&T-Time Warner Deal Expected To Vastly Reshape Media Landscape

Time Warner Chair & CEO Jeff Bewkes over the weekend agreed to sell the company to AT&T for $85B in a deal that, if approved by regulators, will "vastly reshape the media and telecommunications world -- and ultimately the way Americans will consume and pay" for TV, according to Andrew Ross Sorkin of the N.Y. TIMES. AT&T Chair & CEO Randall Stephenson insisted that he has "no intention to limit Time Warner’s content on rival systems and that 'it doesn’t make business sense' to restrict the distribution of Time Warner programming." While AT&T "probably won’t be able to use Time Warner’s current crop of channels to bludgeon its competitors, it will be able to use Time Warner’s creative team to devise all sorts of new programming options, many of which could become exclusive to AT&T" (N.Y. TIMES, 10/24). In L.A., James, Li & Faughnder wrote the deal, which "appears to be imminent," would turn AT&T "into the nation's largest entertainment company," surpassing Disney and Comcast, which owns NBC Universal (L.A. TIMES, 10/23). In N.Y., David Gelles writes AT&T will "suddenly become Comcast's closest true rival" (N.Y. TIMES, 10/24). The WALL STREET JOURNAL's Hagey, Cimilluca & Ramachandran take a look at how the deal unfolded behind the scenes. Stephenson said of Time Warner's content offerings, "If you were ever going to do something like this, this is the content you’d like to use as an anchor tenant" (WALL STREET JOURNAL, 10/24). In N.Y., Josh Kosman cites a source as saying that Apple "met with Time Warner several times in the last 18 months but has not presented an offer." Some on Wall Street believe Apple CEO Tim Cook is "still interested in Time Warner." The source said, "A rival will make an offer by Thanksgiving or not at all" (N.Y. POST, 10/24).

CONTENT PLAY: In N.Y., Michael de la Merced in a front-page piece notes reaction to the deal "was swift -- and, outside of Wall Street, full of skepticism." At issue is whether AT&T, with over 100 million subscribers across its wireless, broadband and DirecTV offerings, will "somehow favor its own customers when it comes to HBO, CNN and Warner Bros. properties." Stephenson and Bewkes stressed that the idea "driving the talks was that Time Warner could help AT&T build out its own video streaming service" called DirecTV Now (N.Y. TIMES, 10/24). The WALL STREET JOURNAL's Miriam Gottfried writes AT&T, which is "preparing to launch an internet TV service, hopes to use those assets to be ready for a world where people predominantly watch video online and on their mobile devices" (WALL STREET JOURNAL, 10/24). In L.A., James & Faughnder write the proposed deal is the "most dramatic example yet of the shift in the balance of power in Hollywood from the big screen to the small screen." The deal "underscores the blurring of lines between technology and entertainment industries." Instead of "relying so heavily on traditional pay-TV operators, Time Warner’s content would get pushed out through AT&T’s mobile network" (L.A. TIMES, 10/24). In Dallas, Conor Shine wrote Time Warner and AT&T "made it clear they think that future centers on video, mobile and finding new ways to bring the two together" (DALLAS MORNING NEWS, 10/23). In Atlanta, J. Scott Trubey in a front-page piece writes Time Warner subsidiary Turner and its networks, shows and rights to sports such as the NBA "could help AT&T find new revenue and bulk up with content needed to have video everywhere" (ATLANTA JOURNAL-CONSTITUTION, 10/24).

TALENT SHOW: Stephenson said that he "plans to keep in place much of Time Warner's management team." Stephenson and Bewkes said that "maintaining the executive ranks of the media company would be a priority." Stephenson: "I made it clear to [Bewkes] that the talent that he assembled was a really important part of this deal." In L.A., Meg James noted AT&T probably "won't take control" of Time Warner until sometime in '18 (LATIMES.com, 10/23).

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