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Following the news which sent Time Warner shares to a 15-year high and a gain of almost 8% where Time Warner was said to be in the middle of a takeover plan by AT&T, the shares of the company are now experiencing a decline of 3.06% after investors showed doubt between the prospects of the acquisition.

Reports show during last Friday’s trading session that AT&T could potentially strike a merger deal to buy Time Warner in hopes of bringing their blockbuster and all-time classic films to the mobile viewing business. This would also give AT&T a chance to test out a new path for the company.  This would not be the first acquisition AT&T has done following their $48.5 billion purchase of DirecTV which is a satellite TV provider.

The news which added to the prospect of media and technology company mergers and acquisitions sent other shares such as Netflix, Discovery, and CBS to also rally. Time Warner, the company responsible for HBO, Warner Brothers, and Turner Broadcasting system, currently holds a net worth of $73 billion this year which is currently the company’s biggest so far.

Despite the positive investor response on the possibility of a merger between the two companies, shares dropped during Monday’s close after last week’s report showed that a deal could be reached as early as the recent weekend. The lack of update then decreased investor confidence on the possible merger between AT&T and Time Warner.

Time Warner Content through Digital Streaming

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The increasing demand for online streaming of content and the ongoing shift to digital media gives AT&T’s plans to expand their market an edge following their acquisition of DirecTV which is a wireless and internet service provider.

Although AT&T stated that a deal could be reached by the weekend following their Friday announcement, the news and the possible acquisition following their merger with DirecTV have already filled a cement in their claim in the digital content streaming which would also bring Time Warner’s blockbuster contents into the digital streaming media and would give them more revenue given the increasing demand for content made available through mobile streaming.

Should Time Warner decide that they will accept the acquisition from AT&T, the telecommunications company and is not carrying any experience in their prospects in the streaming business.

Time Warner Shares

From a low-volatile trading for the past couple of weeks, Time Warner shares surged on the news that AT&T has agreed to an $85.4 billion acquisition of Time Warner by more than 8% in the middle of advanced talks between the two companies. The RSI Indicator also showed that after the AT&T news, the stocks were overbought.

 

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After the weekend, shares dropped to 3.06% after Monday’s close on the lack of update regarding the merger between the two companies and the lack of investor confidence on the acquisition. The skepticism led the stock to open at 87.55 and close at 86.74.  Despite the decline, the stock did not incur losses in their gains from the two most recent trading sessions which were in a rally following the acquisition news.

Despite the huge growth prospect that the merger proposition brings, Time Warner remains to be a good dividend stock even without a takeover. 

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