Time Warner is the belle of the ball at the moment, as the prominent company has multiple suitors in addition to the previously revealed courting of AT&T.
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AT&T is well aware of the increasing interest in the company, and according to a source close to the situation (via Bloomberg Markets) is attempting to head off other possible bidders at the pass and close the deal as soon as possible.
The source, who wishes to be unidentified, has also said the conversations between the companies has intensified. The last thing they want to do is lose Time Warner to other companies like Google or Apple. The renewed interest has had a significantly positive effect on Time Waner’s stock, which has risen 14% to $94.44 and has increased the company’s market value to over $70 billion.
Both Apple and Google are staying quiet on their plans or interest, but a source within Apple says they aren’t planning on bidding, at least at the moment. The rumor of their involvement stems a discussion between Eddy Cue, Apple’s services and content chief, and Olaf Olafsson, who is Time Warner’s corporate strategy head. Still, it’s unlikely that they will enter the fray.
Regardless of who puts in a bid for Time Warner, the bid itself will need to start at $100 a share according to Brean Capital analyst Alan Gould, who values the shares at $123 currently.
“We have always believed that the combination of content and distribution makes sense,” Gould said in the note. Time Warner “has been the greatest content factory for films and TV. Given the rapidly evolving distribution universe, we believe content ownership could be beneficial.”
AT&T is still the predominant favorite to absorb Time Warner, and it would definitely have positive effects for the company. Time Warner owns HBO, CNN, Justice League studio Warner Bros., and of course DC Comics, all assets that would definitely be worth coveting. The only problem is that if they do absorb the company, they will also take on at least another 24 billion in long-term debt, adding to their current debut of $120 billion.
While Time Warner’s stock went up, AT&T’s went down 4%. If the deal does go through, many will be interested to see how things shake out at AT&T in the long term, and how they adjust to their sizable new addition. As for Warner Bros. and DC Entertainment, it’s doubtful that any significant changes would occur, at least in the short term.
