Tough battle for huge AT&T, Time Warner merger
The proposed merger of AT&T and Time Warner is the latest in a growing line of alliances between media companies.
But like the deals we are seeing here in New Zealand, there are doubts about whether this latest media mega-merger will win the approval of the regulators.
Phone and internet company AT&T wants to buy Time Warner for US$85.4 billion. That's around $120 billion New Zealand dollars.
AT&T will pay US$107.50 for each share in Time Warner share, in a combination of cash and stock, worth US$85.4 billion overall. AT&T said it hopes to close the deal by the end of 2017.
AT&T wants to use Time Warner to create a rival to digital platforms like Netflix. It has seen a decline in its satellite TV business DirecTV. So next month it will launch DirecTV Now - an internet video service.
One problem in setting up DirecTV Now has been securing content.
That is where Time Warner comes in. It owns Hollywood's biggest studio Warner Brothers, CNN, HBO (the home of Game of Thrones) and DC comics (the home of Superman, Batman and Wonder Woman).
But analysts say the deal will face a tough battle to get past US regulators.
The US Justice Department will be asking the same questions the Commerce Commission is asking about the NZME/Fairfax deal and the sale of Vodafone New Zealand to Sky TV.
Is too much power going to be concentrated in the hands of too few? Will it mean higher prices for consumers? Will it harm competition?
US Republican Presidential nominee Donald Trump said at the weekend he would block the AT&T-Time Warner deal if he wins the election. He told a rally: "It's too much concentration of power in the hands of too few."
Democratic candidate Hillary Clinton has not yet spoken about the deal. But she has previously expressed concern about major mergers.
Her running mate Tim Kaine told NBC's Meet the Press that: "Less concentration, I think, is generally helpful, especially in the media."
Former Democratic Presidential candidate Bernie Sanders tweeted that President Barack Obama should end the merger: "This deal would mean higher prices and fewer choices for the American people."
It is a case of history repeating itself for Time Warner. It was bought by AOL at the height of the dotcom boom in 2000 for US$164 billion.
The executives and shareholders of Time Warner and AT&T will be hoping this deal is more successful. The AOL / Time Warner deal turned out to be a disaster.
Months after the deal was finalised the dotcom bubble burst and advertising dollars dried up. AOL's value was written down by US$99 billion.
The AT&T / Time Warner deal is different. It is a merger of two "legacy" companies that are trying to adapt in a fast changing media world.
The AOL / Time Warner deal was a merger of a new media company with an old media business. AOL was valued more highly than Time Warner even though Time Warner had real assets. That is something that became clear when the dot com bubble burst.
Now, AT&T is buying content. Lots and lots of content.
It will now be up to the regulators to determine if the deal should be approved, and it will be up to the markets to decide if the price is right.