American wireless major AT&T and Time Warner have met for informal discussions about a possible merger, as per a Bloomberg report.
This will be the largest acquisition of the year for AT&T after buying DirecTV for $49 billion.
The company already has $120 billion in debt, but even then analysts have voiced the opinion that the move may transform AT&T into a leading communications and entertainment enterprise.
AT&T had invested $18 billion in the federal airwave auction also, last year.
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Since the DirecTV acquisition, AT&T owns a broad network but lacks in-house content, in contrary to rivals Comcast or Verizon.
With AT&T planning to roll out a streaming TV channel service, reports suggest that it also wants to add more content and original programming to its services.
Currently, Time Warner has a market value of about $65 billion and AT&T has a market value of about $238 billion.
With the deal, AT&T will gain access to a collection of popular programming like HBO, NBA basketball, and the Cartoon Network.
Time Warner has the premium channel HBO, with recent success in the direct-to-consumer model HBO Now launched 18 months ago. Time Warner also owns cable channels CNN and TNT, alongside the major movie studio Warner Bros.
With changes in regulators, it is unclear as to whether such a move will be approved by the Donald Trump or Hillary Clinton administration.
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Time Warner has been approached for acquisition by Rupert Murdoch and his sons at 21st Century Fox two years ago, but the deal failed.
This move may stiffen competition to cable-rival Comcast, which owns NBC Universal and Dreamworks, with AT&T having the added advantage of mobile phone operations.
Similar acquisitions in the past have seen Disney acquiring Marvel, Lucasfilm, and investing in the MLB Advanced Media streaming service.
Also, Verizon bought AOL and is closing the deal with Yahoo, boosting its content and advertising market.
Vina Krishnan
editor@telecomlead.com
