U.S. telecom behemoth, AT&T Inc. (T - Free Report) progressed with its proposed $85.4 billion acquisition of media giant Time Warner Inc. (TWX - Free Report) following approval from the Chilean competition authority, The Fiscalía Nacional Económica (FNE).
In fact, with the approval from FNE the merger has been approved by antitrust officials in 17 countries and is still waiting for the same from Brazil and the United States. The deal is currently under review by the U.S. Department of Justice, which will scrutinize the planned merger thoroughly and assess its impact.
Notably, since the announcement of the deal in October 2016, the industry has been rife with speculation over whether the deal will get regulatory approval. With such mixed speculations, AT&T still expects the merger to close by the end of the year.
Per the approval, AT&T or Time Warner is not required to sell or divest any assets.
After the proposed deal is finally accepted, the combined entity will become a major player in the consolidated telecom-media space.
In fact, the merger with Time Warner will provide AT&T a portfolio of lucrative content. Additionally, AT&T will enjoy control over both high-quality content and distribution medium. This is because Time Warner's media empire includes HBO and Turner Broadcasting, which has the rights to sports telecast. Also, it owns the Warner Bros. film studio and cable networks TNT, TBS and CNN. Moreover, Time Warner owns a 10% stake in Internet video provider Hulu.
Interestingly, the U.S. pay-TV industry has been witnessing massive consolidation between telecommunication and media companies, intending to remain more competitive, while widening and retaining its position in the industry.
Evidently, Cable TV giant Comcast Corp. (CMCSA - Free Report) acquired NBC Universal in 2011. Also, Verizon Communications Inc. (VZ - Free Report) has acquired AOL and the Internet-based assets of Yahoo! Inc. to create a major player in the mobile media and advertising space.
Price Performance & Zacks Rank
AT&T’s price performance has been dull for the last three months. The stock was down 8.2% compared with the industry’s decline of 3.2% during the same time period. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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