In the cable, media and telecom sector, Barclays notes that companies have been seeking both horizontal and vertical integration "given the myriad of trends impacting the consumption and distribution industries."
For AT&T, Time Warner is "one of the few media companies without super voting shares" and which "has the potential to provide immediate industry scale," according to the firm.
Barclays currently believes Dallas-based AT&T "has its plate full," with the ongoing integration of DirecTV and the launch of an over-the-top (OTT) streaming TV subscription this fall.
But the firm "could see the value proposition provided by moving into the content arena."
"The logic for the transaction would largely have to be predication no competitive necessities, opportunity costs and revenue synergies with benefits unlikely to accrue immediately," Barclays noted, because the upfront financial benefits are not as "readily apparent."
Shares of Time Warner were edging higher in late afternoon trading.
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Separately, TheStreet Ratings objectively rated AT&T stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "buy" with a ratings score of A+.
The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
You can view the full analysis from the report here: T