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AT&T : The latest on the AT&T and Time Warner Merger

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06/15/2018 | 05:13am CEST

AT&T Completes Acquisition of Time Warner Inc.

AT&T Inc. (NYSE:T) has completed its acquisition of Time Warner Inc., bringing together global media and entertainment leaders Warner Bros., HBO and Turner with AT&T's leadership in technology and its video, mobile and broadband customer relationships.

'The content and creative talent at Warner Bros., HBO and Turner are first-rate. Combine all that with AT&T's strengths in direct-to-consumer distribution, and we offer customers a differentiated, high-quality, mobile-first entertainment experience,' said Randall Stephenson, chairman and CEO of AT&T Inc. 'We're going to bring a fresh approach to how the media and entertainment industry works for consumers, content creators, distributors and advertisers.'

Stephenson said the future of media entertainment is rapidly converging around three elements required to transform how video is distributed, paid for, consumed and created. Today, AT&T brings together:

  • Premium Content: Broadly distributed, robust premium content portfolio that combines leading movies and shows from Warner Bros., HBO and Turner, along with more targeted digital content from Bleacher Report, FilmStruck and AT&T's investment in Otter Media, among others.
  • Direct to Consumer Distribution (D2C): AT&T has more than 170 million D2C relationships across its TV, video streaming, mobile and broadband services in the U.S., mobile in Mexico, TV in Latin America, in addition to D2C digital properties such as HBO NOW, Boomerang, FilmStruck and CNN.com.
  • High-Speed Networks: AT&T's leading wireless and fiber network, including investments in new technology such as 5G, will provide the network bandwidth required as customers increase engagement with premium video and emerging 4K and virtual reality content.

Company Structure, Executive Leadership

AT&T Inc. consists of four businesses. This structure allows each business to operate independently and move quickly, while at the same time innovating across AT&T with content, connectivity and advertising. The four business are:

  • AT&T Communications provides mobile, broadband, video and other communications services to U.S.-based consumers and nearly 3.5 million companies - from the smallest business to nearly all the Fortune 1000 - with highly secure, smart solutions. Revenues from these services totaled more than $150 billion in 2017.
  • AT&T's media business consists of HBO, Turner and Warner Bros. Together, these businesses had revenues of more than $31 billion in 2017. A new name for this business will be announced later.
  • AT&T International provides mobile services in Mexico to consumers and businesses, plus pay-TV service across 11 countries in South America and the Caribbean. It had revenues of more than $8 billion in 2017.
  • AT&T's advertising and analytics business provides marketers with advanced advertising solutions using valuable customer insights from AT&T's TV, mobile and broadband services, combined with extensive ad inventory from Turner and AT&T's pay-TV services. A name for this company will be announced in the future.

Jeff Bewkes, former chairman and CEO of Time Warner Inc., has agreed to remain with the company as a senior advisor during a transition period. 'Jeff is an outstanding leader and one of the most accomplished CEOs around. He and his team have built a global leader in media and entertainment. And I greatly appreciate his continued counsel,' Stephenson said.

As previously announced, leading the four businesses and reporting to Stephenson will be:

  • John Donovan, CEO of AT&T Communications;
  • John Stankey, CEO of AT&T's media business;
  • Lori Lee, CEO of AT&T International and Global Marketing Officer of AT&T Inc.; and,
  • Brian Lesser, CEO of AT&T's ad and analytics business.

All of Jeff Bewkes' direct reports will now report to John Stankey.

Acquisition Financial Details

Under the terms of the merger, Time Warner Inc. shareholders received 1.4 shares of AT&T common stock, in addition to $53.75 in cash, per share of Time Warner Inc. As a result, AT&T issued 1,185M shares of common stock and paid $42.5B in cash. Including net debt from Time Warner, we now have $180.4B in net debt.

We will begin consolidating Time Warner Inc. results effective June 15, 2018.

The company expects the acquisition to provide significant financial benefits:

-Accretive year-one adjusted earnings per share and free cash flow; strengthened dividend coverage

-Increased synergies to $2.5 billion

  • $1.5 billion in annualized cost synergies by end of year 3 following close
  • $1 billion of annualized revenue synergies by end of year 3

-Maintain solid balance sheet and improved credit metrics

  • Net debt to adjusted EBITDA 2.9x at close
  • 2.5x at end of year 1; return to historical levels by end of year 4

*About AT&T

AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. It consists of four businesses. AT&T's media business, with its HBO, Turner and Warner Bros. divisions, is a world leader in creating premium content, operates one of the largest TV and film studio, and owns a vast library of entertainment. AT&T Communications has relationships with more than 100 million U.S. consumers across TV, mobile and broadband services. Plus, it serves nearly 3.5 million business customers with high-speed, highly secure connectivity and smart solutions. AT&T International provides pay-TV services across 11 countries and territories in Latin America and the Caribbean, and is the fastest growing wireless provider in Mexico, serving consumers and businesses. AT&T ad and analytics provides marketers with innovative, targeted, data-driven advertising solutions around premium video content.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com.

© 2018 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's website at https://investors.att.com.

AT&T Applauds Court Decision on Time Warner Deal

The following statement should be attributed to David McAtee, AT&T General Counsel:

'We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government's lawsuit to block our merger with Time Warner. We thank the Court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government. We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.'

Disclaimer

AT&T Inc. published this content on 14 June 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 15 June 2018 03:12:02 UTC

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Financials ($)
Sales 2018 173 B
EBIT 2018 32 898 M
Net income 2018 20 735 M
Debt 2018 170 B
Yield 2018 6,06%
P/E ratio 2018 11,04
P/E ratio 2019 10,96
EV / Sales 2018 2,36x
EV / Sales 2019 2,16x
Capitalization 240 B
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Mean consensus HOLD
Number of Analysts 29
Average target price 35,9 $
Spread / Average Target 8,7%
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Managers
NameTitle
Randall L. Stephenson Chairman, President & Chief Executive Officer
John J. Stephens CFO, Principal Accounting Officer & Senior EVP
Joyce M. Roché Independent Director
Laura D'Andrea Tyson Independent Director
Matthew K. Rose Lead Independent Director
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