The deal will face serious opposition.
Republican presidential candidate Donald Trump on Saturday vowed flatly to block a deal if elected.
"As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," Trump said.
Senator Edward Markey, a Massachusetts Democrat, also raised serious concerns.
"In the telecommunications market, we need more competition, not more consolidation. We need a telecommunications market where pay-TV gatekeepers don't favor their own content providers," Markey said. "Less competition has historically resulted in fewer choices and higher prices for consumers, and this deal should be assessed with consumers, competition and choice in mind."
AT&T said the Justice Department will review the deal but said it is unclear if the FCC will also have to approve the deal since the companies haven't decided "which FCC licenses, if any, will be transferred to AT&T in connection with the transaction."
Barclays analyst Amir Rozwadowski said distributors could increasingly look to buy content. "Companies that traditionally ran their businesses in 'siloed' environments are now expanding their reach into tangential markets in order to seek out new growth and bundling services in order to reduce churn," he said.
Cable company Comcast kicked off the trend with its acquisitions of NBCUniversal in 2011 and more recently of DreamWorks Animation in a bid to become a massive force that controls how television shows and movies are made and delivered to viewers. (Disclosure: Comcast is parent of NBCUniversal and CNBC.)
Comcast's acquisition was in part aimed at diversifying its business out of cable.
AT&T has already made moves to turn itself into a media powerhouse, buying satellite TV provider DirecTV last year for $48.5 billion.
It also entered into a joint venture, Otter Media, with the Chernin Group in 2014. The venture invests in media businesses and has rolled out video streaming services targeted at millennials.
Meanwhile, Verizon Communications, has made a number of content acquisitions, including AOL. It has announced plans to buy internet company Yahoo but has indicated it may renegotiate following a breach of Yahoo user email accounts.
As its bread-and-butter wireless operations struggle in a saturated phone market, Verizon had said in July it would buy Yahoo's core business for $4.83 billion to drive growth in advertising and media.