It had about 142 million North American wireless subscribers as of June 30, and about 38 million video subscribers through DirecTV and its U-verse service.
New York-based Time Warner is a major force in movies, TV and video games. Its assets include the HBO, CNN, TBS and TNT networks as well as the Warner Bros film studio, producer of the “Batman” and “Harry Potter” film franchises. The company also owns a 10 percent stake in video streaming site Hulu. The HBO network alone has more than 130 million subscribers.
AT&T Chief Executive Officer Randall Stephenson told reporters on a conference call that owning Time Warner and all its content will provide a greater competitive advantage than just continuing to license it.
Talks between Stephenson and Time Warner CEO Jeff Bewkes began in August, they said. "Jeff and I both had a vision that if you put these two together, you could innovate much faster," said Stephenson.
Bewkes, who rejected an $80 billion offer from Twenty-First Century Fox Inc in 2014, will stay on for an open-ended period of time to help with the integration.
Stephenson called the deal "vertical" rather than "horizontal" and played down regulatory hurdles.
"There's no competitor being removed from the marketplace, there's no competitive harm that is being rendered by putting these two companies together," said Stephenson. "So any concerns by the regulators, we believe, will be adequately addressed by conditions, that's our anticipation."
Time Warner must pay AT&T $1.725 billion if it finds a different buyer. If regulators block the deal, AT&T must pay Time Warner $500 million, according to people familiar with the deal.
The telecom and media sectors have been consolidating. In addition to Comcast's purchase of NBCUniversal, AT&T's wireless rival Verizon Communications Inc (VZ.N) is in the process of buying internet company Yahoo Inc (YHOO.O) for about $4.8 billion.
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