AT&T Completes Acquisition of Time Warner Inc.

Positioned to be a Global Leader as a Modern Media Company

Set to Create the Best Entertainment and Communications Experiences
in the World

DALLAS–(BUSINESS WIRE)–AT&T Inc. (NYSE:T) has completed its acquisition of Time Warner Inc.,
bringing together global media and entertainment leaders Warner Bros.,
HBO and Turner with AT&T’s leadership in technology and its video,
mobile and broadband customer relationships.

“The content and creative talent at Warner Bros., HBO and Turner are
first-rate. Combine all that with AT&T’s strengths in direct-to-consumer
distribution, and we offer customers a differentiated, high-quality,
mobile-first entertainment experience,” said Randall Stephenson,
chairman and CEO of AT&T Inc. “We’re going to bring a fresh approach to
how the media and entertainment industry works for consumers, content
creators, distributors and advertisers.”

Stephenson said the future of media entertainment is rapidly converging
around three elements required to transform how video is distributed,
paid for, consumed and created. Today, AT&T brings together:

  • Premium Content: Broadly distributed, robust premium content
    portfolio that combines leading movies and shows from Warner Bros.,
    HBO and Turner, along with more targeted digital content from Bleacher
    Report, FilmStruck and AT&T’s investment in Otter Media, among others.
  • Direct to Consumer Distribution (D2C): AT&T has more than 170
    million D2C relationships across its TV, video streaming, mobile and
    broadband services in the U.S., mobile in Mexico, TV in Latin America,
    in addition to D2C digital properties such as HBO NOW, Boomerang,
    FilmStruck and CNN.com.
  • High-Speed Networks: AT&T‘s leading wireless and fiber network,
    including investments in new technology such as 5G, will provide the
    network bandwidth required as customers increase engagement with
    premium video and emerging 4K and virtual reality content.

Company Structure, Executive Leadership

AT&T Inc. consists of four businesses. This structure allows each
business to operate independently and move quickly, while at the same
time innovating across AT&T with content, connectivity and advertising.
The four business are:

  • AT&T Communications provides mobile, broadband, video and
    other communications services to U.S.-based consumers and nearly 3.5
    million companies – from the smallest business to nearly all the
    Fortune 1000 – with highly secure, smart solutions. Revenues from
    these services totaled more than $150 billion in 2017.
  • AT&T’s media business consists of HBO, Turner and Warner
    Bros. Together, these businesses had revenues of more than $31 billion
    in 2017. A new name for this business will be announced later.
  • AT&T International provides mobile services in Mexico to
    consumers and businesses, plus pay-TV service across 11 countries in
    South America and the Caribbean. It had revenues of more than $8
    billion in 2017.
  • AT&T’s advertising and analytics business provides
    marketers with advanced advertising solutions using valuable customer
    insights from AT&T’s TV, mobile and broadband services, combined with
    extensive ad inventory from Turner and AT&T’s pay-TV services. A name
    for this company will be announced in the future.

Jeff Bewkes, former chairman and CEO of Time Warner Inc., has agreed to
remain with the company as a senior advisor during a transition period.
“Jeff is an outstanding leader and one of the most accomplished CEOs
around. He and his team have built a global leader in media and
entertainment. And I greatly appreciate his continued counsel,”
Stephenson said.

As previously announced, leading the four businesses and reporting to
Stephenson will be:

  • John Donovan, CEO of AT&T Communications;
  • John Stankey, CEO of AT&T’s media business;
  • Lori Lee, CEO of AT&T International and Global Marketing Officer of
    AT&T Inc.; and,
  • Brian Lesser, CEO of AT&T’s ad and analytics business.

All of Jeff Bewkes’ direct reports will now report to John Stankey.

Acquisition Financial Details

Under the terms of the merger, Time Warner Inc. shareholders received
1.4 shares of AT&T common stock, in addition to $53.75 in cash, per
share of Time Warner Inc. As a result, AT&T issued 1,185M shares of
common stock and paid $42.5B in cash. Including net debt from Time
Warner, we now have $180.4B in net debt.

We will begin consolidating Time Warner Inc. results effective June 15,
2018.

The company expects the acquisition to provide significant financial
benefits:

  • Accretive year-one adjusted earnings per share and free cash flow;
    strengthened dividend coverage
  • Increased synergies to $2.5 billion

    • $1.5 billion in annualized cost synergies by end of year 3
      following close
    • $1 billion of annualized revenue synergies by end of year 3
  • Maintain solid balance sheet and improved credit metrics

    • Net debt to adjusted EBITDA 2.9x at close
    • 2.5x at end of year 1; return to historical levels by end of year 4

*About AT&T

AT&T Inc. (NYSE:T) is a diversified, global leader in
telecommunications, media and entertainment, and technology. It consists
of four businesses. AT&T’s media business, with its HBO, Turner and
Warner Bros. divisions, is a world leader in creating premium content,
operates one of the largest TV and film studio, and owns a vast library
of entertainment. AT&T Communications has relationships with more than
100 million U.S. consumers across TV, mobile and broadband services.
Plus, it serves nearly 3.5 million business customers with high-speed,
highly secure connectivity and smart solutions. AT&T International
provides pay-TV services across 11 countries and territories in Latin
America and the Caribbean, and is the fastest growing wireless provider
in Mexico, serving consumers and businesses. AT&T ad and analytics
provides marketers with innovative, targeted, data-driven advertising
solutions around premium video content.

AT&T products and services are provided or offered by subsidiaries and
affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
Additional information is available at about.att.com.

© 2018 AT&T Intellectual Property. All rights reserved. AT&T, the Globe
logo and other marks are trademarks and service marks of AT&T
Intellectual Property and/or AT&T affiliated companies. All other marks
contained herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates
and other forward-looking statements that are subject to risks and
uncertainties, and actual results might differ materially. A discussion
of factors that may affect future results is contained in AT&T’s filings
with the Securities and Exchange Commission. AT&T disclaims any
obligation to update and revise statements contained in this news
release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures.
Reconciliations between the non-GAAP financial measures and the GAAP
financial measures are available on the company’s website at https://investors.att.com.

Contacts

AT&T Corporate Communications
Erin McGrath, 214-862-0651
erin.mcgrath@att.com