text: Mike Snider, and Roger Yu
  AT&T's planned $85.4 billion acquisition of Time Warner, the New York-based company that owns HBO, CNN, TNT and Warner Bros. film studio, is a huge domino falling in the content business. The deal, which comes with the requisite promises of innovation and cost-savings, will make competitors in the Internet and media businesses uneasy.
  The move could also set off a new wave of telecommunications companies and Internet giants, such as Google and Apple, buying or making deals with popular content programmers, further blurring the boundaries among the industries. In fact, Apple had been rumored for months to be a potential acquirer of Time Warner. Google's interest in buying premium entertainment content, such as the right to stream NFL games, has also been widely reported.
  Other cable network operators that also could be potential takeover targets, to name a few, include: AMC Networks, best-known for its top-rated TV show The Walking Dead, but which also owns BBC America and SundanceTV; and Discovery Communications, which owns Discovery Channel, The Learning Channel and Animal Planet.
  The acquisition, which marries partners in distribution and content, will trigger multiple layers of complexity for customers, industry regulators, investors and consumer watchdogs as they sort out revenue possibilities and conflicts of interest. But competitors of Time Warner or AT&T can no longer afford to stand by idly.
  Telecom providers have been shopping for content companies as their wireless smartphone and broadband Internet service markets mature and growth slows. "As upside from data usage seems to be increasingly capped, we would not be surprised if other distributors were to potentially embrace larger opportunities in the content arena over time," said Barclays analysts Kannan Venkateshwar and Amir Rozwadowski in a recent note to investors.
  Ownership of Time Warner's content – including Harry Potter movies, CNN, NBA basketball on TNT, MLB baseball on TBS, HBO's critically acclaimed shows, and DC Entertainment films, whose franchises include Superman, Batman and Wonder Woman -- guarantees that AT&T can readily make those programs available on its DirecTV satellite TV service without cumbersome negotiations. AT&T can also stream those shows to its Net-delivered and wireless DirecTV-branded streaming services in the works -- and even waive monthly data limits for AT&T smartphone and Internet customers. AT&T bought DirecTV last year for $48.5 billion.
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  Owning content also helps pay-TV providers to avoid costly conflicts over the escalating prices they pay to carry programming, he said. And Time Warner's networks, particularly HBO and TNT, fetch some of the highest fees for pay-TV providers. After closing the acquisition, AT&T-DirecTV will dictate financial and legal terms of Time Warner's negotiations with other cable competitors. "With content costs continuing to increase, operators are expecting more such conflicts in the future. So, ensuring access to popular content certainly helps AT&T," Sappington said.
  Comcast's acquisition of NBC Universal in 2011 foreshadowed AT&T-Time Warner deal. And regulators' approval of the deal and Comcast's continued profitability from its business diversity have emboldened pay-TV competitors.
  Verizon's announced July purchase of Yahoo for $4.8 billion -- and its May 2015 $4.4 billion deal for AOL -- involved content, as well as Internet advertising, making it "a case of buying what it needed to better monetize the data its network produces," said analyst Brian Wieser of Pivotal Research.
  CBS Corp. and Viacom, despite the recent turmoil surrounding Viacom's management, could be targets. The controlling shareholders of both companies – principally, billionaire media mogul Sumner Redstone and his daughter, Shari Redstone – have called on the two companies to merge. With a combined market cap of more than $40 billion, a CBS-Viacom would hold not only CBS' various networks including Showtime, but also Viacom's assets such as Paramount, BET, Comedy Central, MTV and VH1.
  Other standalone media companies, such as AMC, Discovery and Scripps, which owns HGTV and Food Network, will be subjects of ongoing merger speculation.
  As the telecom-media world turns, regulators will have their hands full. AT&T's Chairman and CEO Randall Stephenson told reporters that he doesn't see difficulty in passing regulatory muster since he's buying a "supplier," or in business parlance, a deal of "vertical integration." Anti-trust regulators have been typically more concerned with horizontal integration deals, in which a company buys a rival and gain greater market share.
  But given the size of the deal, regulators will hardly rubber-stamp their approval. They did put some conditions on Comcast's acquisition of NBC Universal -- a similar case of vertical integration -- and the same would likely happen here, Sappington says.
  "The fact that AT&T is not one of the two largest pay-TV providers in the U.S. market will help," he said. "It makes it more difficult for opponents to claim a monopolistic advantage for AT&T in this merger."
  The presidential election also could be a variable. Republican presidential candidate Donald Trump said he'd oppose the merger, if elected, saying "deals like this destroy democracy."