AT&T Buys Time Warner For More Than $85 Billion

AT&T has officially agreed to terms with Time Warner to buy the media giant for $85.4 billion. On Saturday evening, AT&T announced the deal, which was approved by the boards of both companies earlier in the day.

The merger creates a giant media company, giving the phone and internet service provider access to Time Warner's programming — including HBO. CNN, DirecTV and film studios, among other media assets. The deal still must be approved by federal regulators.

"This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers," said AT&T Chairman and CEO Randall Stephenson in a statement. He added: "It's a great fit, and it creates immediate and long-term value for our shareholders."

On weekend All Things Considered, NPR's Jim Zarroli broke down AT&T's rationalefor the acquisition:

"This is really a marriage of content and distribution. AT&T right now has access to millions of consumers because it sells Internet and wireless and satellite service. Buying Time Warner means it also will have access to content those customers want to see."

The sale comes more than two years after Time Warner spurned a takeover bid from Rupert Murdoch's 21st Century Fox. That deal was also worth around $80 billion — and unlike the current merger plan, it would have forced the new company to sell CNN to earn regulators' approval.

Back in 2014, the Fox bid would have priced Time Warner shares at $85; when the markets closed Friday, Time Warner stock was at nearly $90 — on the strength of a nearly $6.50 one-day surge that was fueled by rumors of the pending merger.

For Time Warner, the deal represents the second time it's been purchased since the start of 2000 — that's the year AOL announced a plan to buy the company for more than $160 billion, in a short-lived but disastrous union (from 2003: AOL Posts Record $99-Billion Loss).

For AT&T, the merger continues a push into content as it adjusts to a mature wireless sector. Consider that in 2014, the company announced its plan to buy DirecTV in a deal worth nearly $50 billion — and that less than a year later, Apple, the poster child for the marriage of tech and media, replaced AT&T in the benchmark Dow Jones industrial average.

The new merger also puts content creators Time Warner and AOL on opposite sidelines in the telecom game: In 2015, AT&T rival Verizon paid $4.4 billion to acquire AOL and its media properties, including Huffington Post and TechCrunch.

Acquiring Time Warner also gives AT&T a potent answer to Verizon's plan to buy Yahoo for $4.8 billion — a deal that has been clouded by concerns over a large-scalehack of Yahoo's database.