Famed value investor Mario Gabelli, a major shareholder of both AT&T and Time Warner, told CNBC on Monday the proposed mega-merger of the two companies is a move to prepare for the next decade, and could spark a flurry of similar deals.
The billionaire chairman and CEO of Gamco Investors owns 4 million shares of Time Warner and 2.9 million shares of AT&T. "We're a cheerleader for both companies."
As a Time Warner shareholder, Gabelli said on "Squawk Box" that the $85 billion agreement with AT&T, announced Saturday evening, is an interesting exit. "I have no problem with it."
If Time Warner were to back out of the deal, the media giant agreed to pay AT&T a $1.7 billion termination fee. AT&T, in turn, would pay Time Warner $500 million if the deal doesn't go through under certain conditions.
"It's [also] open to the free market process. If somebody wants to come in and top it, obviously we'd be further cheerleaders," he said from the Time Warner perspective.
Gabelli said he owns most of his AT&T shares because the telecom giant bought DirecTV last year for $48.5 billion. AT&T would bring Time Warner's content in TV and movies under the same roof as its satellite, broadband and wireless businesses.
AT&T Chairman and CEO Randall Stephenson told CNBC on Monday the deal is a "pure vertical integration," which means the companies don't compete in any businesses.
Time Warner Chairman and CEO Jeff Bewkes told "Squawk Box" in the same interview consumers will end up with more choices because of the proposed transaction.