TURNER AT A GLANCE Founded: 198o by Ted Turner Sold: 1996 to Time Warner Properties: CNN, TNT, TBS, Turner Classic Movies, Turner Sports, Cartoon Network, Adult Swim, plus other channels and websites. Employees: About 11,000, roughly half in Atlanta as of mid-2015 Financials: Has more than $10 billion in revenue, or 37 percent of Time Warner’s total, according to regulatory filings. CEO: John Martin (based in New York)
AT&T has agreed to buy Time Warner, parent of CNN and other Atlanta-based properties of the Turner broadcasting business, for $85.4 billion, the companies announced Saturday night.
The blockbuster merger, if approved by regulators, will create a telecom and media behemoth that both creates and distributes content from a bevy of high-profile brands including CNN and Turner networks such as TBS, TNT and Cartoon Network.
New York-based Time Warner also owns HBO, the Warner Bros. film and TV studio and Castle Rock Entertainment.
“This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers,” said Randall Stephenson, CEO of Dallas-based AT&T. “Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen.
The deal could also raise new questions about the future structure of Turner and its Atlanta operations.
Over the two decades of Time Warner ownership, Turner’s strategic center of gravity has shifted toward New York. Current CEO John Martin and the chiefs of some of the networks are based there, though the corporate address remains at CNN Center in Atlanta, where the cable news giant has studios and newsrooms.
Turner also has production facilities and offices in Midtown.
Turner supplies about 37 percent of Time Warner revenue, according to regulatory filings. It employs about 5,500 people in Atlanta.
The companies’ announcement gave no hint of any organizational changes envisioned.
“Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis,” Time Warner CEO Jeff Bewkes said in a release, “and to capitalize on the tremendous opportunities created by the growing demand for video content.”
The deal is all about content: AT&T, which bought DirecTV last year for nearly $50 billion, has been a giant of distribution, a national matrix of cable and satellite television as well as a vast network of wireless phones. The company reaches out and touches tens of millions of Americans every day.
But when it comes to content, what AT&T deliver typically comes from somebody else.
The deal would give AT&T control of programming that includes entertainment, news and sports, much of it as high-profile, highly-regarded — or at least highly watched — content from Anderson Cooper, to “Big Bang Theory” to “Game of Thrones.”
Time Warner also recently bought a 10 percent stake in Hulu, the streaming service.
The move to combine distribution and content got a big boost in 2011, when cable TV and broadband giant Comcast bought NBC Universal, including NBC, MSNBC, Telemundo and other channels.
The deal is not the first offer for Time Warner, which rebuffed a lower-priced bid from Fox in 2014.
AT&T will pay $107.50 a share in the stock-and-cash deal. Time Warner stock had traded at about $83 before reports of the possible deal sent it to $89.48 on Friday.
At stake for Atlanta are thousands of jobs, huge flows of corporate spending and of course, the prestige of being home to household names like CNN.
Sometimes, a deal can mean a dramatic shift of resources, with AT&T itself as evidence: When SBC bought the venerable phone company in 2005, it wanted to keep the nearly century-old name, but moved most corporate functions to Dallas.
On the other hand, when SBCbought BellSouth, it kept Cingular Wireless – originally BellSouth’s wireless unit and now AT&T Mobility – in Atlanta.
Most likely to get pulled away would be the kinds of corporate functions that overlap with work being done elsewhere. Departments like accounting and marketing, the centralized work of human resources, seem the likeliest candidates.
But AT&T could easily see the value in keeping creative work right where it is succeeding.
Atlanta’s recent emergence as a hotbed of television and film work has meant a surge in the quality and numbers of people in the industry. Dallas is not known as a home of similar talent, a contrast that could work in Atlanta’s favor.
Moreover, even if some corporate functions are moved, if the creative departments stay here, then at least a few levels of the executive oversight presumably would stay to manage them.
Some analysts said the deal would be a financial stretch for AT&T as it still digests the DirecTV acquisition.
They also predict a tough regulatory review and opposition in Washington.
John Bergmayer of the public-interest group Public Knowledge, which often criticizes media consolidation, warned of harm to consumers.
For example, he said AT&T might refuse to carry channels that could compete with Time Warner’s networks. Or on its phones, AT&T could let wireless customers watch TV and movies from Time Warner without using their data, in turn disfavoring video from other providers.
If the deal is approved, regulatory conditions could limit AT&T’s ability to favor Time Warner video or give AT&T customers better deals. It would be one of the largest media mergers since Time Warner’s disastrous sale to AOL in 2000, which was later undone.
The Associated Press contributed to this article.
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