Jeffrey Bewkes, now the chief executive of Time Warner, “once described his company’s colossal failure of a merger with AOL” this way: “You had a lot of people saying you should’ve combined a donkey with a rabbit and gotten a flying unicorn.” So writes Andrew Ross Sorkin in The New York Times. At the time Bewkes was running Time Warner’s HBO unit.
So why did Bewkes and his board, over the weekend, approve an $85 billion bid from AT&T?
Writes Sorkin, “The worry among consumer groups and rivals, of course, is that for AT&T to make the deal work strategically and financially — the company is paying a 35 percent premium to Time Warner’s stock price before news of the deal broke last week — it is going to use Time Warner’s content as a weapon against its rivals by raising the price that they pay for carriage of channels such as HBO and CNN, while integrating those same channels into new AT&T offerings at lower prices.
‘Randall Stephenson, AT&T’s chief executive, dismissed that notion in an interview on Sunday, calling it ‘illogical’ and saying he wants to ‘dispel’ such an idea. He insisted he has no intention to limit Time Warner’s content on rival systems and that ‘it doesn’t make business sense’ to restrict the distribution of Time Warner programming.”
To read more details about this story, including why AT&T thinks the deal does make sense, please click here, which will take you to Sorkin’s article.