Ever read an article and had to do a double take? That’s what happened to me this morning. Because I read of a merger that could change everything…again. Is AT&T buying Time Warner?
While various reports come in, I’m still amazed at this one. According to such reports, AT&T verbally agreed to buy Time Warmer. As a result, the deal is worth $85 billion dollars. Hence, this deal gives AT&T control of cable channels HBO and CNN. It would also give them control over Warner Brothers, one of the biggest entertainment corporations in the world. While nothing is final, expect to hear an official word in the coming days.
But maybe this shouldn’t surprise me. The company led the telecommunication industry since the 1880s. Now they want the media industry. Recently, they bought direct TV for $48.5 billion. They also entered joint ventures with Otter Media and Chernin Group, a media based venture group. But back to Time Warner. If the deal is official, AT&T will offer $110 for every Time Warner share. That includes some cash as well. It has to be this way. AT&T only has $7.2 billion in cash. From what I hear, AT&T already struggles with debt. I also hear their credit rating rating faces tremendous pressure.
That’s just one of the reasons this merger should not happen. First of all, AT&T can’t afford it. Sure, you can give stocks and bonds. While Time Warner’s ticker tape grew 8%, AT&T’s stock went down 3%. From where I sit, this doesn’t spell good for the oldest and most respected telephone company in the world. That brings another point. What does AT&T have to do with media? Okay, that was a dumb question. They sell products that give us media. But how good are they with producing media. Ask yourself this question: Do you want AT&T controlling your news? Do you want them producing and controlling your movies and TV programs?