Telecom giant AT&T has agreed to buy Time Warner for US$85.4 billion in a stock-and-cash transaction valued at $107.50 per share. That’s about half of the $162 billion AOL paid for the company in 2000.

The agreement, which has been approved unanimously by the boards of directors of both companies, is expected to close at the end of 2017, creating a new company with a focus on content and mobile.

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The deal will give AT&T access to Time Warner’s media properties including HBO, Warner Bros and CNN. With a mobile network that covers more than 315 million people in the United States, the combined company plans to compete with cable companies offering bundled mobile broadband and video streaming packages.

The business will pursue a two-sided business model of both advertising and subscriptions. “Owning content will help AT&T innovate on new advertising options, which, combined with subscriptions, will help pay for the cost of content creation,” the company said. “It will disrupt the traditional entertainment model and push the boundaries on mobile content availability for the benefit of customers.”

“Premium content always wins. It has been true on the big screen, the TV screen and now it’s proving true on the mobile screen,” said Randall Stephenson, AT&T chairman and CEO. “We’ll have the world’s best premium content with the networks to deliver it to every screen. A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that.”

Time Warner Chairman and CEO Jeff Bewkes described the deal as a “natural fit between two companies with great legacies of innovation that have shaped the modern media and communications landscape.”

“This is a great day for Time Warner and its shareholders. Combining with AT&T dramatically accelerates our ability to deliver our great brands and premium content to consumers on a multiplatform basis and to capitalise on the tremendous opportunities created by the growing demand for video content,” Bewkes said.

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The merger is subject to approval by Time Warner Inc. shareholders and will have to clear regulatory hurdles including review by the U.S. Department of Justice.

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