In the world of media, bigger remains better.
So in the wake of Comcast's $30 billion takeover of NBCUniversal and Verizon Communications' serial acquisitions of the Huffington Post and Yahoo, AT&T plans to buy one of the remaining crown jewels of the media world.
The telecommunications giant agreed on Saturday to buy Time Warner, the home of HBO and CNN, for about $85.4 billion, creating a new colossus capable of both producing content and distributing it to millions with wireless phones, broadband subscriptions and satellite TV connections.
The proposed deal is likely to spur more consolidation among media companies, which have already looked to partners to get bigger. This year, Lionsgate struck a deal to buy the pay-TV channel Starz for $4.4 billion. The Redstone family, which controls CBS and Viacom, has urged the corporate siblings, which split 10 years ago, to consider reuniting.
AT&T and Time Warner said both of their boards unanimously approved the deal.
"Premium content always wins," Randall Stephenson, AT&T's chief executive, said in a statement. "We'll have the world's best premium content with the networks to deliver it to every screen."
Most analysts and investors have noted that Time Warner was part of one of the biggest merger follies of all time, when it sold itself to AOL at the height of the dot-com boom. That combination — also pitched on the idea of uniting content and the Internet — proved unwieldy and was later stripped apart to a few core businesses.
This time, however, the rise of online outlets like Netflix, Amazon Prime and YouTube and the shift of younger customers from traditional media have pressured media companies to seek out consolidation partners. These media companies are anticipating drops in fees from cable service providers and declining revenue from advertisers. Getting bigger would give them more negotiating leverage with both service providers and with advertisers.
Among their top priorities is finding new ways of reaching consumers. HBO, for example, offers its HBO Now service to deliver shows like Game of Thrones and Westworld to consumers who do not have cable subscriptions.
Even Disney, widely seen as the strongest content company, with brands like Pixar, Marvel and Lucasfilm, has been grappling with how to overcome challenges facing its network channels. ESPN, which long served as a growth engine, is now facing declining ratings and subscriber erosion, putting advertising sales into question.
"The biggest thing that we're trying to do now is figure out what technology's role is in distributing the great content that we have," Robert Iger, Disney's chief executive, said at a presentation at Boston College on Oct. 5. Noting the blue-chip entertainment brands controlled by Disney, Iger added: "In today's world, it's almost not enough to have all that stuff unless you have access to your consumer."
Comcast's takeover of NBC has proved a model for the new world of media deal-making. While the cable giant has occasionally been scrutinized for possible regulatory violations, NBCUniversal has generally thrived under its current ownership, with NBC enjoying a ratings comeback and Universal delivering a wide range of hit films, from blockbusters like Jurassic World to dramas like Straight Outta Compton.
Still, Time Warner's deal with AT&T is likely to face tough scrutiny from government regulators increasingly skeptical of power being consolidated among a few titans. Even Donald Trump, the Republican nominee for president, indicated on Saturday that he would block the merger if elected "because it's too much concentration of power in the hands of too few."
Over the past decade, Time Warner has spent significant time selling or spinning off AOL, many of the Time Inc. stable of publications, and Time Warner Cable, which was sold to another cable operator. The remaining businesses are HBO, one of the most-admired pay-TV channels; Warner Bros. movie studios; and cable channels that include CNN, TNT, Turner Sports and TBS.
Overseeing much of Time Warner's downsizing was the company's chief executive, Jeffrey Bewkes, for whom Saturday's agreement serves as validation of sorts. Bewkes faced tough questions two years ago when he turned down 21st Century Fox's bid of $85 a share, arguing that the offer sharply undervalued his company.
Now, Bewkes has found a suitor willing to offer significantly more — $107.50 a share in cash and stock — and done so at a time when media companies are under pressure to strike their own deals.
"Time Warner chairman and CEO Jeff Bewkes and his senior management team can see where the entire legacy media world is headed: secular decline," Richard Greenfield, a media analyst at BTIG, a global financial services firm, wrote in a research note on Saturday.
Greenfield added: "We believe Bewkes will end up being remembered as the smartest CEO in sector — knowing when to sell and not overstaying his welcome to maximize value for shareholders."
The announcement on Saturday also affirms the ambitious deal-making of AT&T. One of the former so-called Baby Bells that arose from the 1982 breakup of the original AT&T, the company has spent hundreds of billions of dollars on acquisitions to reconstitute some of its parent's former empire.
Much of the drive behind AT&T's serial takeovers has been in search of growth. But the rate of growth of wireless subscribers has slowed as most Americans now own smartphones, leaving the company to find new avenues for sales.
That has included buying DirecTV for $48.5 billion, adding satellite TV subscriptions as an additional source of negotiating leverage with content providers, along with the satellite company's steady stream of cash.
AT&T has also made other moves to acquire content. It has set up a joint venture with Peter Chernin, a prominent media executive, and the company was one of the bidders for Yahoo this year.
The telecom company has also been working on its own online video service, for which Time Warner's trove of media could prove enormously helpful.
Still, AT&T's biggest rivals have not stood still. Comcast struck an agreement this spring to buy DreamWorks Animation for $3.8 billion, adding the Shrek and Kung Fu Panda franchises to its media holdings.
Verizon has charted a different course, focusing more on internet-based properties and advertising technology players rather than traditional media companies. Its $4.8 billion deal to buy Yahoo, rooted in the aging tech company's hundreds of millions of users, follows previous takeovers of the Huffington Post and AOL.
Other media companies are also likely to pursue deals. Smaller channel operators like Discovery Communications and AMC have long been discussed as potential merger partners with their peers, hoping to become bigger and perhaps more attractive to a bigger buyer down the line.
In his research note on Saturday, Greenfield of BTIG speculated that a combined CBS and Viacom would also seek to expand through deal-making.
Not everyone seems persuaded by the latest flurry of deal-making, however. In a Twitter message on Saturday, Steve Case, the former chief executive of AOL responsible for the doomed merger with Time Warner, wrote of AT&T's move, "#DejaVu."