AT&T Just Lost $16.5 Billion Ahead of Time Warner Takeover

Soon-to-be subsidiary has shed almost $1.7 billion of its own since Wednesday

AT&T Time Warner
AT&T Time Warner

It’s been a pretty rough 48 hours for AT&T.

The telecom giant, currently awaiting regulatory approval to acquire Time Warner, has lost $16.52 billion in market capitalization since the stock markets officially opened on Wednesday morning. Unfortunately, the company AT&T is trying to buy for big bucks just dropped $1.68 billion itself over even fewer trading hours.

Alas, the “Buy Low” concept of investment definitely isn’t in play now. AT&T has already agreed to buy Time Warner for $107.50 per share, but due to the latter’s losses as of late, TWX’s current value per share is hovering around $101 apiece. As a result, AT&T will be paying more than a 6 percent premium for the acquisition.

In response, other TV company stocks — like Disney, AMC Networks and Discovery — have seen a similar trajectory over the second half of the week: so what happened? Cord-cutters happened. Yes, again.

On Wednesday, satellite television company DirecTV’s parent AT&T said it anticipates a quarterly loss of 390,000 traditional TV subscribers. While they expects to add 300,000 customers back through an over-the-top digital offering, that option brings in lower revenue per customer. Plus, it’s still a net loss of 90,000 bills being sent out monthly.

So go scold a millennial, shareholders of every company mentioned in this article. Yes, even you, Mickey Mouse House. The TV industry has a “bad for the goose” effect, which explains why Bob Iger’s wallet is feeling a little lighter this week.

But back to the main players of the week, those directly effected by the worse-than-anticipated sub losses. Should it get the government’s OK to close, the still-on cash-and-stock deal will cost AT&T about $85 billion, making this the biggest media merger since AOL’s $165 billion purchase of Time Warner in 2000. Hopefully this one works out better.

The new Time Warner takeover creates a distribution and content colossus of the digital age, bringing together premium assets including satellite TV provider DirecTV, cell phone network AT&T Wireless, the Warner Bros. movie and television studios and HBO and Turner cable channels under one, massive corporate roof. You know, unless the losses force them to downsize to a smaller office.