Happy Merger Monday, AT&T/Time Warner Division. "The future of video is mobile and the future of mobile is video," says this press release about AT&T Inc.’s proposed acquisition of Time Warner Inc., and everyone does seem to think that. I guess it must be true. The inevitable future of television, of movies, of sports, of news, of all entertainment, of all human activities really, is that you will watch them on your phone. Your phone is smaller than your television, never mind an IMAX screen, never mind reality, and the sound isn’t great. But you will always have it with you, and you will always be looking at it, and you will always be entertained. Everything will be worse, but ubiquitous. Actually that would be a good slogan for a mobile/video conglomerate. Anyway! The deal is for $107.50 in a 50/50 mix of cash and stock, implying a Time Warner equity price of $85.4 billion and enterprise value of $108.7 billion. Here’s the merger agreement . The breakup fee (if Time Warner accepts a better deal, etc.) is $1.75 billion; if the deal is killed by antitrust authorities, AT&T will reimburse Time Warner for up to $500 million of expenses. The agreement seems relatively untroubled by antitrust concerns — Time Warner can’t force AT&T to divest more than a de minimis amount of its businesses to get the deal done — which may be because there is not much antitrust overlap here. AT&T owns mostly phone networks, Time Warner owns mostly cable channels and production studios, and those businesses do not compete with each other in any particularly obvious way. But that doesn’t mean there won’t be a lot of antitrust trouble. The main worry is that if you combine the content with the pipes, then you can restrict […]
