Update: AT&T reportedly in advanced talks to buy Time Warner

Image: Mike Mozart/Flickr

AT&T’s long-speculated acquisition dalliance with Time Warner Inc. has moved to the level of advanced talks that could culminate in a deal as soon as this weekend, the Wall Street Journal

The two sides are reportedly talking about a cash and stock deal. Earlier, Bloomberg reported that the two companies have conducted informal meetings in recent weeks and that neither side had yet hired consultants. 

AT&T reps had no comment for FierceCable

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RELATED: Rumor mill: AT&T preparing bid for piece of Time Warner Inc.

Shares of Time Warner rose as much as 9.5 percent on the initial report, with the company ending trading Thursday with an asset value of around $67.5 billion. 

There exists a solid synergistic narrative for the deal.

AT&T is transitioning itself into a media distribution powerhouse and could use a good content engine like Time Warner, home to HBO, Turner Networks, Warner Bros. TV Studios and Warner Bros. Pictures, among other programming assets.

Other operators are moving to augment broadband connectivity growth with content, evidenced by Comcast's $500 million investment last year in Buzzfeed and Vox.

Time Warner Inc., meanwhile, exists in a challenging era for distribution, where linear paths are eroding and new digital ways and means — such as SVOD — are hard to establish. 

Coming off its $49 billion purchase of DirecTV in 2015, and the $18 billing it spent on the FCC’s spectrum auction late last year, AT&T only has around $7.2 billion in cash on hand. It would probably have to run up its net debt further beyond the $120 billion where it currently stands. 

"While we have no knowledge of these discussions, we wouldn't be surprised if the two parties were discussing strategy, particularly as Time Warner content is being offered as part of the pending launch of DirecTV Now, and AT&T is looking to develop innovative video services," Jefferies analyst Mike McCormack said in a note to investors. "Given AT&T's comments regarding another large transaction, and an FCC that appears hostile to marrying distribution and content, we see a merger as an unlikely scenario."

UPDATED: The story was updated on October 21 to account for the additional information from the Wall Street Journal

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