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AT&T is Looney Tunes to try to buy Time Warner

Jennifer Saba
Source: Warner Bros.

AT&T just drew up some cartoonish M&A. The U.S. telecom titan is paying about $85 billion in cash and stock for Time Warner, the owner of HBO, CNN and the Warner Bros. studio behind Looney Tunes animation and other film and TV classics. Conventional financial analysis cannot justify the whopping premium on offer. Instead, Time Warner shareholders reap the benefits of an AT&T desperately in search of a new business model.

Jeff Bewkes, Time Warner's chief executive, has proven to be a shrewd dealmaker. He carved up a sprawling empire, spinning off cable, magazines and the remnants of AOL. Without a controlling family shareholder and with quality programming in high demand, Time Warner became all the more appealing. And having swatted away an unwanted approach from Rupert Murdoch's Twenty-First Century Fox a couple of years ago, Bewkes is looking even more prescient.