In the largest proposed deal of the year, AT&T reached an agreement to buy Time Warner. Some observers are skeptical, comparing the acquisition to the spectacularly failed AOL–Time Warner merger of 2000. Others say the new company will be a “powerhouse.”
Will the outcome be different this time? AT&T’s stock is not massively overvalued, as AOL’s was. Broadband has made the experience of consuming content far better than it was with dial-up. And consumers are shifting away from TV and toward mobile devices. Combining the second-largest wireless carrier with the fourth-biggest entertainment company — one whose impressive assets include HBO and CNN — is likely to create an unassailable mobile-entertainment business.
