For AT&T, Time Warner was always on a menu


NEW YORK When Time Warner Inc’s (TWX.N) Jeff Bewkes welcomed ATT Inc’s (T.N) Randall Stephenson for lunch during Time Warner Center in New York in late August, their assembly was ostensible to be one of a catch-ups a dual arch executives have had over a years.

And it positively started that way, with a dual group chatting about a instruction of a media, broadband and mobile telecommunications industries, according to accounts given by Stephenson and Bewkes as good as people informed with a discussions who spoke on condition of anonymity.

Stephenson and Bewkes discussed how Time Warner could strech some-more business by ATT’s mobile network, and how that calm could strengthen a faithfulness of customers. Some of this could be achieved by closer ties and partnerships.

But afterwards Stephenson showed his hand. He due an undisguised partnership of a dual companies, a biggest shakeup in a U.S. media landscape given U.S. telecommunications hulk Comcast Corp’s (CMCSA.O) takeover of media organisation NBC Universal in 2011.

“The some-more we talked about it, a some-more it fell into place, that there would be advantages that competence be poignant and competence concede us to develop a ecosystem faster,” Bewkes told reporters on a discussion call on Saturday.

Comcast’s understanding had severely shabby Stephenson’s thinking, spurring him to demeanour for media and video acquisitions now that ATT had a many video subscribers in a U.S. with 25 million. The media companies he initial looked during buying, such as Starz (STRZA.O), that after assimilated with Lions Gate Entertainment Corp (LGF.N), and Scripps Network Interactive Inc (SNI.O), were too tiny for his liking.

Stephenson’s problem was that a vast media companies he deemed appealing were not easy targets. CBS Corp (CBS.N) and Viacom (VIAB.O) were family controlled, while Walt Disney Co (DIS.N), with a $150 billion marketplace capitalization, was too big.

When Twenty-First Century Fox Inc (FOXA.O) done a antagonistic partnership proceed to Time Warner in 2014, ATT was available regulatory capitulation on a understanding to buy DirecTV, and couldn’t pursue another vast understanding during a same time.

During a year after a DirecTV partnership sealed in Jul 2015, ATT had been meditative about going dual ways; possibly a vast general acquisition, or a vast calm deal. Before shopping DirecTV, it had looked during mixing a business with Vodafone Group Plc (VOD.L) in Europe, according to a sources. But after shopping dual smaller wireless companies in Mexico, it couldn’t find an general partnership that matched a appetite.

More than a year after a DirecTV understanding sealed however, Stephenson felt he had a firepower to pursue Time Warner with an $85.4 billion cash-and-stock bid, this year’s biggest attempted partnership globally.

The understanding was referred to within ATT, in sequence to forestall leaks, as “Project Bobtail”, whose aim was to acquire “Rabbit”, a formula name for Time Warner and maybe a loyalty to Warner Bros’ Bugs Bunny character. ATT’s formula name was “Lily”, a same as a patron use chairman who appears in their commercials.

“This thing only had what we would call gravity, and it seemed to pierce along on a possess and we began negotiating out terms really fast and it was a really healthy process,” Stephenson pronounced on a media call.


Soon after Stephenson due a multiple to Bewkes, a companies called in their many devoted investment bank advisers.

ATT motionless to work with Woody Young, who had assimilated boutique bank Perella Weinberg Partners LP in January. He had worked on deals for ATT for dual decades, and many recently suggested ATT on a DirecTV understanding in 2014, when he was during Lazard Ltd (LAZ.N).

Time Warner enlisted Allen Company LLC landowner Ketan Mehta, who had been Time Warner’s landowner for 12 years and had many recently shielded Time Warner from Fox when he was during Citi in 2014. He had also helped urge Time Warner opposite romantic financier Carl Icahn in 2006.

The priority was to keep a understanding tip from a media, a plea given that Time Warner has vast fiefdoms in a industry, with HBO in New York, Turner Broadcasting and a news section CNN in Atlanta and Warner Bros in Los Angeles.

Time Warner never reached out to other intensity suitors during a talks with ATT, according to a sources. Apple Inc (AAPL.O), widely speculated as another intensity customer for Time Warner, never showed a clever interest, a sources said, indicating out that after Fox’s bid for Time Warner many other companies deliberate an partnership though never done any offers.

Large investment banks were brought on for financing in a week heading adult to ATT’s and Time Warner’s proclamation on Saturday. When Bloomberg News reported on Thursday that a dual companies had spontaneous conversations about a partnership but advisors, Stephenson and Bewkes had already jarred hands on a understanding and their play were tighten to commendatory it over a weekend. To finalize a deal, Time Warner’s house met in a offices of law organisation Cravath, Swaine Moore LLP’s offices in New York and ATT’s house assembly was hold during a domicile in Dallas on Saturday.

The understanding was announced Saturday night, that caused Stephenson, an Oklahoma native, to skip a University of Oklahoma college football game. He had to ask a contributor for a score.

(Reporting by Liana B. Baker in New York; Additional stating by Jessica Toonkel and Malathi Nayak in New York; Editing by Greg Roumeliotis and Mary Milliken)


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