The Making of the AT&T-Time Warner Deal

Two months ago, AT&T Chief Executive Randall Stephenson stopped by Time Warner Chief Executive Jeff Bewkes’s offices in New York for a lunch of salmon, while musing about the increasing convergence of the media and telecommunications industries. During their lunch, Stephenson surprised Bewkes by suggesting that AT&T buy Time Warner, apparently. Bewkes said it wasn’t for sale, but at the right price he would consider an offer, apparently, signaling that a deal was possible.

Stephenson walked away with his mind swirling with the possibilities that Time Warner’s premium content—top brands such as HBO, CNN and Warner Bros.—could bring to the streaming video service he was trying to build. “If you were ever going to do something like this, this is the content you’d like to use as an anchor tenant,” he said. From that point forward, things proceeded at breakneck speed, culminating in the biggest deal of the year as AT&T announced it was buying Time Warner for $107.50 a share—a 36% premium to where its stock was trading before the news of a deal started to trickle out during the week of Oct 17.