If AT&T swallows Time Warner, who might be gobbled up next?

An AT&T retail store in New York. AT&T plans to buy Time Warner for $85.4 billion.
(Mark Lennihan / Associated Press)

Wall Street gave a cool reception Monday to AT&T’s plan to buy Time Warner Inc., illustrating sharply divergent views on whether the blockbuster deal will usher in a new era of media consolidation or merely more scrutiny from federal regulators.

But the uncertainty didn’t stop some analysts from speculating about various combinations that could transform the media business — tantalizing pairings of tech giants with studios, and cable companies with wireless carriers.

A motivator for more deal-making: survival. Traditional media companies are girding for battle with tech powerhouses Google, Facebook, Apple and Amazon and Netflix already have made aggressive moves into producing Hollywood content.

“Overall, we believe we are likely one more deal away from potentially reshaping the landscape for at least a decade,” Barclay’s Equity Research analyst Kannan Venkateshwar wrote in a Monday report. “We are in the midst of a great convergence cycle, which is likely to impact business models for years to come.”


AT&T’s top executive said Monday that he didn’t want his Dallas company to get trampled in the stampede.

“The convergence in terms of media and distribution is moving fast,” AT&T Chairman and Chief Executive Randall Stephenson told analysts in a conference call. “We want to be at the front of it. We don’t want to be chasing it.”

Analysts were split on whether AT&T’s move would spur other companies to combine. Several attributed AT&T’s play as a way to position itself as a more robust competitor to Google and Facebook, which capture the lion’s share of online advertising, and Amazon and Apple, which have strong customer relations.

“These are the big bullies on the playground now,” said Laura Martin, a managing director at Needham & Co. “And AT&T will be roughly the same size if it is allowed to buy Time Warner.”


Some observers believe that another cellphone giant, Verizon Communications, might be interested in buying CBS and Viacom to bulk up in a similar way that AT&T is trying to do with its acquisition of Time Warner, which owns HBO, CNN, TBS and Hollywood’s largest film and television studio, Warner Bros.

CBS Corp. is mulling whether to recombine with Viacom Inc., which owns Nickelodeon, MTV, Comedy Central and Paramount Pictures — a marriage proposed by the controlling shareholder family of Sumner Redstone. Viacom and CBS were part of the same company until Redstone divided his empire in 2006 to untangle the assets that he had spent years putting together.

Tech giants like Apple, Google and Amazon are seen as likely players in the entertainment industry and could be interested in buying content firms.

Apple and Google were even rumored as possible alternative bidders for Time Warner. Many have speculated that Apple Inc., which is sitting on more than $200 billion in cash, might buy a content company to jump start its Apple TV service.


Amazon, the Seattle-based e-commerce giant, has invested heavily in creating its own original TV shows and movies for its Prime streaming service. Meanwhile, Google’s hugely popular YouTube is ramping up original video content for its Red subscriptions service.

One of the biggest question marks is Walt Disney Co.’s next move. The Burbank conglomerate’s growth over the last decade has been largely fueled by the addition of such juggernaut properties as Pixar Animation, Marvel Entertainment and Lucasfilm. This summer, Disney paid $1 billion for a stake in BamTech, the technology company created by Major League Baseball that builds streaming services.

Analysts believe that Disney is keenly interested in diversifying distribution channels because its profit engine, ESPN, has lost millions of subscribers as more consumers trim or ditch their pay-TV bundles. At an investor conference last month, Chief Executive Robert Iger described BamTech as “a great way for us to move ESPN and probably other Disney assets onto digital mobile platforms in a more effective way.”

This fall, Disney looked at buying social messaging service Twitter but took a pass.


“If they did make any move into distribution, Netflix would be the way to do it,” said Scott Krisiloff, chief investment officer at Avondale Asset Management, which is not an investor in Disney. “That’s something I could see Disney doing.”

Disney, Netflix, CBS and Viacom declined to comment. Streaming service Netflix has been a darling of Wall Street because of its rapid growth in subscribers, but that also makes the company more expensive for a potential buyer. Netflix’s market capitalization is $55 billion.

Should AT&T be successful in gobbling up Time Warner, it could encourage cable giants like Comcast Corp. and Charter Communications to pursue deals with mobile carriers like T-Mobile or Sprint, said Matthew Harrigan, media analyst for Wunderlich Securities.

The AT&T-Time Warner deal “could make it more imperative for Comcast to have a robust mobile offering,” Harrigan said.


Comcast, which acquired NBCUniversal five years ago, and Charter, which bought Time Warner Cable in May, have already announced their intentions of seguing into the wireless carrier space. Comcast plans next year to begin offering a branded cellphone service within its current service areas. It has an agreement with Verizon to use its wireless network for the planned service.

However, Harrigan and other analysts don’t expect a wave of deals to acquire big content companies because there aren’t that many attractive options available. Some media companies such as 21st Century Fox are owned by families who would be loathe to relinquish them.

Lionsgate, the Santa Monica studio best known for “The Hunger Games” film franchise, could be a logical purchase for anyone looking to own more movie and television content. The studio has a growing TV production business.

Lionsgate’s stock has fallen about 48% in the last year, thanks to a rocky film slate, and the company is in the process of buying cable channel Starz for $4.4 billion — which could make it more difficult to swallow.


Sony Pictures, owned by Japanese technology giant Sony Corp., has also been mentioned as a target for a tech company or a Chinese firm. (China’s Dalian Wanda Group wanted to buy a large stake in Viacom’s Paramount Pictures before Sumner and Shari Redstone said no.)

Though it has struggled at the box office, Sony has valuable movie franchises such as “Spider-Man” and James Bond, and makes popular TV shows including “The Blacklist” and “Shark Tank.” Nonetheless, Sony Corp. CEO Kazuo Hirai has insisted he is not looking to sell the Culver City operation.

“The studio is an important driver of future growth for Sony, and it has for years been the cornerstone of Sony’s value-chain strategy,” Hirai told Worldscreen, an international TV trade magazine, this month.

Smaller players like Discovery Communications, Scripps Networks Interactive, which owns HGTV and Food Network, and AMC Networks Inc., which boasts “The Walking Dead,” often are considered takeover candidates, but none would be nearly as big of a coup as acquiring Time Warner.


Times staff writer Daniel Miller contributed to this report.

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