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AT&T Closing In on $85 Billion Deal for Time Warner, Could Be Announced as Early as Sunday (Reports)

AT&T Time Warner Merger
AP Photo/Lisa Poole, File

AT&T is nearing the finish line on a deal to acquire media giant Time Warner for $110 per share, Bloomberg and Reuters reported — making the transaction worth about $85 billion.

The deal could be approved by the companies on Sunday and announced as early as Monday, per the Bloomberg story, citing anonymous sources. AT&T will fund the deal with 50% cash and 50% in stock, according the report. Reuters reported that the companies have reached an agreement on most of the merger terms and are aiming to announce the deal as early as Sunday.

If the deal is completed, it would bring together Warner Bros. and Time Warner’s stable of cable networks — including HBO, CNN, TBS and TNT — with AT&T, the country’s biggest telecommunications provider, and DirecTV, which the telco bought last year for $49 billion to make AT&T the No. 1 pay-TV provider in the U.S.

Time Warner and AT&T have declined to comment on the talks.

Time Warner’s stock closed Friday at $89.48, up 7.82% for the day on reports that a deal with AT&T was in advanced discussions. That gives Time Warner a market value of about $70 billion. In after-hours trading, Time Warner was up as much as 5%. AT&T’s stock was down 3% for the day, closing at $37.49 per share (and was down 0.6% in after-hours trading).

Peter Chernin, the former COO of News Corp. who launched a digital content venture with AT&T in 2014, is advising AT&T CEO Randall Stephenson on the Time Warner negotiations, according to sources. It’s speculated that Chernin could play a larger role at AT&T if the Time Warner deal comes together.

To execute such a deal, AT&T would have to raise billions in additional debt. AT&T has $7.2 billion of cash and equivalents on hand, and expects to generate $16 billion in cash from operations in 2016. That means a deal for Time Warner would be highly leveraged, on top of AT&T’s existing $126 billion in long-term debt.

Besides the high price tag, an AT&T-Time Warner merger would face a high level of regulatory scrutiny — as well as restrictions akin to those placed on Comcast when it bought NBCUniversal. And some analysts are skeptical that AT&T would achieve much synergy by owning Time Warner, although the pairing could bulk up both companies’ over-the-top video strategies.

Apple, which has informally explored the idea of buying Time Warner, was said to be “monitoring the situation closely” with respect to the AT&T-Time Warner talks, the Wall Street Journal reported. That could be motivating AT&T to accelerate its push to clinch a deal for Time Warner.

Cynthia Littleton contributed to this report.