AT&T Has Reached a Deal to Acquire Time Warner. Now What?

att-timewarner-hed-2016After a report last week that AT&T and Time Warner had engaged in”informal” talks about a possible merger, the two companies have reached a deal in which the telecommunications powerhouse will buy Time Warner for $107.50 per share, or about $85 billion, half in stock, half in cash. The deal was officially announced tonight in a video message from Time Warner CEO Jeff Bewkes.

“The driving force,” said Bewkes, “is not cost savings it’s growth opportunity.”

The new behemoth will combine Time Warner’s hefty film and TV properties (including Warner Bros., HBO, TNT, TBS and CNN) and AT&T’s robust broadband (U-Verse), wireless (AT&T) and satellite (DirecTV) offerings.

AT&T has a market capitalization of around $230 billion, while Time Warner is valued at $70 billion.

It’s the biggest media merger since Comcast’s acquisition of NBCUniversal in 2013.

After AT&T’s unsuccessful attempt to acquire T-Mobile in 2011, the company shifted its focus to video, acquiring DirecTV last year for $48.5 billion.

As TV viewing habits have rapidly shifted in recent years, owning content is becoming even more important than distributing it, and AT&T CEO Randall Stephenson had been looking to add more original content. The Time Warner deal offers a variety of intriguing possibilities to entice cord cutters, cord shavers and cord nevers. Bewkes acknowledged as much tonight, saying it was a driving force behind a deal.

“This combination is going to put us in an even stronger position to go where our audiences are going,” he said. “Joining forces with AT&T gets us, and them, there faster and better than either of us could do on our own.”

Assuming the deal withstands regulatory scrutiny, many questions surround the new company that comes out of the surprise megamerger. Here are three of the biggest:

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