Will AT&T’s Bid for Time Warner Succeed?

Business / October 31, 2016 /

AT&T’s blockbuster bid for Time Warner Inc. might be a boon for investment bankers, lawyers and lobbyists, but it is anyone’s guess whether investors, employees and consumers ultimately would benefit from the combination.

Since the $85.4-billion deal was unveiled last weekend, AT&T Chief Executive Randall Stephenson and Time Warner Inc. Chief Executive Jeffrey Bewkes have extolled the advantages of marrying the nation’s second largest wireless phone provider with a leading entertainment company, which owns such assets as HBO, CNN, TBS, Cartoon Network and the Warner Bros. film and TV studio in Burbank.

AT&T estimated that it could achieve $1 billion in cost savings in three years after buying Time Warner. Stephenson promised the merger would transform media because AT&T would be able to create new subscription and advertising models. Time Warner movies and popular TV shows like “The Big Bang Theory” could be promoted to AT&T cellphone customers.

But some analysts have expressed doubts that such a massive tie-up will pan out the way that Stephenson and Bewkes hope — should the federal regulators allow the two companies to come together. There’s good reason for skepticism: Many mergers fail to live up to the hype.

“Most of them don’t work out,” said Rita Gunther McGrath, a management professor at Columbia Business School. “And the success rates for the big ones are abysmal.”

Source: Los Angeles Times