The new firm comes after Comcast’s purchase of NBCUniversal for $30bn and after Verizon bought both Yahoo and the Huffington Post.
It means the new firm is now capable of producing content before distributing it with its network of wireless phones, broadband subscriptions and satellite television connections.
When it comes to media companies, it is another indication that big is best and this latest deal is likely to lead to further partnerships among other companies looking to grow.
AT&T and Time Warner said both boards voted unanimously in favour of the deal.
Most analysts said that Time Warner was foolish in an earlier deal when it decided it would sell itself to AOL in a move designed to bring together content and distribution via the internet.
This latest deal, however, is seen as one which needed to be done for company growth. The move away from traditional media by younger customers towards viewing content on the likes of Netflix, Amazon Prime and YouTube has piled the pressure on media companies to seek out allies.
Companies are anticipating that the amount they make from cable service subscription and from advertising revenues will fall. Consolidating into bigger companies gives them more power when it comes to negotiating with service providers and with potential advertisers.
AT&T’s deal means it now has entry into a range of business opportunities in the realms of entertainment, sports and news. Some of the big shows which are part of the deal include Game of Thrones and March Madness.
HBO is seen as being one of the most important aspects of the deal, as it is regarded as being able to deal with huge competitors such as Netflix and Amazon Prime because of its high-quality content and its streaming services HBO GO and HBO Now.
AT&T was concerned that it wasn’t growing in the same way as competitors. But this acquisition is seen as a good deal for shareholders. It comes after an earlier purchase by AT&T of DirectTV, which broadcasts the NFL Sunday Ticket.
However, the merger has been met with outrage from some consumer groups, who have complained that it will thwart competition and could, therefore, create unfair pricing structures as well as leading to similar acquisitions in the future.