AT&T to Acquire Time Warner

New company with complementary strengths to lead the next wave of innovation in converging media and communications industry.

AT&T Inc. (No. 4 on the DiversityInc Top 50 Companies list) and Time Warner Inc. (No. 37 ) announced October 22 they have entered into a definitive agreement under which AT&T will acquire Time Warner in a stock-and-cash transaction valued at $107.50 per share. The agreement has been approved unanimously by the boards of directors of both companies.


The deal combines Time Warner's vast library of content and ability to create new premium content that connects with audiences around the world, with AT&T's extensive customer relationships, world's largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution.

"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, AT&T chairman and CEO. "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. We'll have the world's best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that.  We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.

"With great content, you can build truly differentiated video services, whether it's traditional TV, OTT or mobile. Our TV, mobile and broadband distribution and direct customer relationships provide unique insights from which we can offer addressable advertising and better tailor content," Stephenson said. "It's an integrated approach and we believe it's the model that wins over time.

"Time Warner's leadership, creative talent and content are second to none. Combine that with 100 million plus customers who subscribe to our TV, mobile and broadband services – and you have something really special," said Stephenson. "It's a great fit, and it creates immediate and long-term value for our shareholders."

View a message from Stephenson:

Time Warner Chairman and CEO Jeff Bewkes said, "This is a great day for Time Warner and its shareholders. Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis and to capitalize on the tremendous opportunities created by the growing demand for video content. That's been one of our most important strategic priorities and we're already making great progress — both in partnership with our distributors, and on our own by connecting directly with consumers.  Joining forces with AT&T will allow us to innovate even more quickly and create more value for consumers along with all our distribution and marketing partners, and allow us to build on a track record of creative and financial excellence that is second to none in our industry. In fact, when we announce our 3Q earnings, we will report revenue and operating income growth at each of our divisions, as well as double-digit earnings growth.

Bewkes continued, "This is a natural fit between two companies with great legacies of innovation that have shaped the modern media and communications landscape, and my senior management team and I are looking forward to working closely with Randall and our new colleagues as we begin to capture the tremendous opportunities this creates to make our content even more powerful, engaging and valuable for global audiences."

Time Warner is a global leader in media and entertainment with a great portfolio of content creation and aggregation, plus iconic brands across video programming and TV/film production. Each of Time Warner's three divisions is an industry leader: HBO, which consists of domestic premium pay television and streaming services (HBO Now, HBO Go), as well as international premium & basic pay television and streaming services; Warner Bros. Entertainment, which consists of television, feature film, home video and videogame production and distribution. Warner Bros. film franchises include Harry Potter & DC Comics, and its produced TV series include Big Bang Theory and Gotham; Turner consists of U.S. and international basic cable networks, including TNT, TBS, CNN and Cartoon Network/Adult Swim. Also, Turner has the rights to the NBA, March Madness and MLB. Time Warner also has invested in OTT and digital media properties such as Hulu, Bleacher Report, CNN.com and Fandango.

Customer Benefits

The new company will deliver what customers want — enhanced access to premium content on all their devices, new choices for mobile and streaming video services and a stronger competitive alternative to cable TV companies.

With a mobile network that covers more than 315 million people in the United States, the combined company will strive to become the first U.S. mobile provider to compete nationwide with cable companies in the provision of bundled mobile broadband and video. It will disrupt the traditional entertainment model and push the boundaries on mobile content availability for the benefit of customers. And it will deliver more innovation with new forms of original content built for mobile and social, which builds on Time Warner's HBO Now and the upcoming launch of AT&T's OTT offering DIRECTV NOW.

Owning content will help AT&T innovate on new advertising options, which, combined with subscriptions, will help pay for the cost of content creation. This two-sided business model — advertising- and subscription-based — gives customers the largest amount of premium content at the best value.

Summary Terms of Transaction    

Time Warner shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock. The stock portion will be subject to a collar such that Time Warner shareholders will receive 1.437 AT&T shares if AT&T's average stock price is below $37.411 at closing and 1.3 AT&T shares if AT&T's average stock price is above $41.349 at closing.

This purchase price implies a total equity value of $85.4 billion and a total transaction value of

$108.7 billion, including Time Warner's net debt. Post-transaction, Time Warner shareholders will own between 14.4% and 15.7% of AT&T shares on a fully-diluted basis based on the number of AT&T shares outstanding today.

The cash portion of the purchase price will be financed with new debt and cash on AT&T's balance sheet. AT&T has an 18-month commitment for an unsecured bridge term facility for $40 billion.

Transaction Will Result in Significant Financial Benefits

AT&T expects the deal to be accretive in the first year after close on both an adjusted EPS and free cash flow per share basis.

AT&T expects $1 billion in annual run rate cost synergies within 3 years of the deal closing. The expected cost synergies are primarily driven by corporate and procurement expenditures. In addition, over time, AT&T expects to achieve incremental revenue opportunities that neither company could obtain on a standalone basis.

Given the structure of this transaction, which includes AT&T stock consideration as part of the deal, AT&T expects to continue to maintain a strong balance sheet following the transaction close and is committed to maintaining strong investment-grade credit metrics.

By the end of the first year after close, AT&T expects net debt to adjusted EBITDA to be in the 2.5x range.

Additionally, AT&T expects the deal to improve its dividend coverage and enhance its revenue and earnings growth profile.

Time Warner provides AT&T with significant diversification benefits:

- Diversified revenue mix — Time Warner will represent about 15% of the combined company's revenues, offering diversification from content and from outside the United States, including Latin America, where Time Warner owns a majority stake in HBO Latin America, an OTT service available in 24 countries, and AT&T is the leading pay TV distributor.

- Lower capital intensity — Time Warner's business requires little in capital expenditures, which helps balance the higher capital intensity of AT&T's existing business.

- Regulation — Time Warner's business is lightly regulated compared to much of AT&T's existing operations.

The merger is subject to approval by Time Warner Inc. shareholders and review by the U.S. Department of Justice.  AT&T and Time Warner are currently determining which FCC licenses, if any, will be transferred to AT&T in connection with the transaction. To the extent that one or more licenses are to be transferred, those transfers are subject to FCC review. The transaction is expected to close before year-end 2017.

AT&T Completes Acquisition of Time Warner Inc.

"We're going to bring a fresh approach to how the media and entertainment industry works for consumers, content creators, distributors and advertisers," said Randall Stephenson, chairman and CEO of AT&T Inc.

Originally Published by Time Warner Inc.

AT&T Inc. has completed its acquisition of Time Warner Inc., bringing together global media and entertainment leaders Warner Bros., HBO and Turner with AT&T's leadership in technology and its video, mobile and broadband customer relationships.

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AT&T and U.S. Air Force Academy Collaborate to Explore Advanced Technologies

Formal 5- Year Agreement Aims to Help U.S. Air Force Keep Pace With, Acquire and Use Commercial Technology.

Originally Published by AT&T.

AT&T* and the U.S. Air Force Academy are working together on networking services and advanced technology capabilities. They entered a 5-year Cooperative Research and Development Agreement (CRADA) aimed at boosting the Air Force's use of modern technology at a pace more like the commercial sector.

"Networking is a platform for innovation and mission support," said Lt. Col. Michael Chiaramonte, director of Air Force CyberWorx at the Air Force Academy. "With access to AT&T's resources, we plan to advance our academic and research objectives. By leveraging public-private partnerships with AT&T and our other industry partners, we improve our understanding and use of technology and, ultimately, improve the Air Force's mission capabilities."

The collaboration aims to:

  • Offer knowledge and commercial best practices of cybersecurity, Internet of Things, and other AT&T-led innovations for the Air Force Academy faculty. Such innovations include Smart Base solutions, software-defined networking and 5G.
  • Provide hands-on demonstrations for Academy cadets.
  • Ensure AT&T has greater insight into the vision and technology needs of the U.S. Air Force.
  • Explore opportunities beyond academic interests.

"Our work with the U.S. Air Force Academy will be much like an action-oriented academic 'think tank.' We're here to help the Air Force keep pace with commercial innovation and pinpoint their current and future technology needs," said Rocky Thurston, Client Executive VP, AT&T Public Sector.

Part of the Air Force's larger mission

Partnerships fuel the Academy research program. There are 19 centers and 2 institutes, as well as cadets, faculty and industry all working together for the benefit of tomorrow's Air Force. CyberWorx was established in 2016 as a public-private design center focused on cyber capability. It combines Air Force, academic and industry expertise with state of the art technology and innovative thinking to solve operational problems.

Time Warner: The Last O.G. Wins Big by Doing Good

Just in time for the season one finale of The Last O.G., the Turner Blog interviewed Turner veteran Gabby Ballard, senior marketing manager-TBS Brand Marketing, who leads the team responsible for bringing viewers to this mega-hit show.

Originally Published by Time Warner.

The Last O.G. has been on it's A-game since day one with the premiere marking TBS' biggest comedy premiere since 2015. Since then it's kept its roll going as 2018's #1 show among all cable comedies this year and reached a multiplatform audience of nearly 25 million viewers. ICYMI, we said ALL of cable.

Just in time for the season one finale of The Last O.G., the Turner Blog interviewed Turner veteran Gabby Ballard, senior marketing manager-TBS Brand Marketing, who leads the team responsible for bringing viewers to this mega-hit show. Her team and the entire brand marketing group are the hub that brings everyone together for one common goal: promote the heck out of their original series. Mission accomplished.

When asked if she was surprised at the immediate success of The Last O.G., Gabby pointed to the all-star cast of Tracy Morgan, Tiffany Haddish and Cedric the Entertainer, among others, as the reason why they knew they had a hit on their hands before an episode even aired. "This talent has incredible and faithful fandom that we were able to tap into, as well as everyone was cheering for Tracy's comeback story," said Gabby.

She also credits major cross-collaboration amongst the TBS and Turner teams. "We were able to have fun with the creative, such as establishing an amazing in-character social media voice, as well as creating content that was humorous as well as insightful, and create a hosted programming stunt."

Additionally, one of the groundbreaking marketing strateg­­ies for helping the show stay on top of the ratings mountain and entice viewers was to leverage Turner's other great influential platforms to promote the show and make the biggest impact possible. "We kicked the campaign off with All-Star Weekend in partnership with TNT, then on to the NCAA Final Four on TBS, and finally the NCAA Championship Game," said Gabby.

The show deals with some very timely and tough topics like gentrification and re-entering society after serving time. Similarly, the marketing needed to be culturally relevant with nearly every facet of the campaign having an element of social responsibility and giving back linked to it. Gabby was eager to point out many examples.

  • As part of the TBS sponsored New York Comedy Festival, Tracy and Cedric the Entertainer hosted "A Toast to the O.G.'s of Comedy," a night of stand-up alongside an array of young comedians, as well as a sit-down conversation with the comics whom they have inspired. The event proceeds (over $14,000) benefited the Fortune Society, a charity that supports successful re-entry from incarceration.
  • Greyston Bakery, the largest social enterprise dedicated to open hiring practices, partnered with the The Last O.G. to release a custom O.G. Fudge Brownie. The O.G. Brownie was in stores for a limited time in 50 locations and 6 cities nationwide.
  • Tracy Morgan returned to his hometown, Brooklyn, N.Y., to dedicate a newly refurbished basketball court to the community. In partnership with TBS, the basketball court at the famous Marcy Playground now includes new asphalt, fresh backboards and a millennial pink, O.G.-inspired mural from artist ASKEW ONE. Over 800 people attended the dedication/block party which included a DJ, stunt dunkers, lots of family activities and local vendors.

As Gabby so eloquently put it, "Through the themes of 'The Last O.G.,' I think it's beautiful to be able to give back and have people benefit from art. You know what I mean?" Yes Gabby, we totally get it.

Finally, Gabby was asked to give us some insider info of what's coming up for season two. Surely, she had some juicy info just for us…

Her response: "A real O.G. never snitches, but we will have some amazing guest stars and the show will continue the great, unique brand of humor that it's established."

Well played Gabby, well played.

AT&T: How to Build a Culture of Learning

Instead of only providing employees with classroom and web-based training, we're also supplementing those resources with relevant content from social and digital platforms, like social media channels, podcasts and video platforms.

By Jennifer Robertson

Originally Published by AT&T.

Last year, best-selling author and New York Times columnist Thomas Friedman visited AT&T. During a conversation with employees, he emphasized the importance of continuous learning for employees and employers to succeed in the age of acceleration.

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Time Warner: Ladies in Tech at Turner: Noyda Matos

Noyda's journey into the field, how she overcomes obstacles, and her advice to young women who want to follow her lead.

TIME WARNER

Originally Published by Time Warner.

Noyda Matos, applications architect – CNNMoney, never thought she'd work in technology. She wanted to be a lawyer. But when the Cuba native encountered educators talking about the joys of computer science at a local university, the experience forever changed her, inspiring Noyda to ditch her law aspirations and explore the world of mathematics.

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