"A consistent theme across cable, media and telecom has been the potential for both vertical and horizontal consolidation given the myriad of trends impacting the consumption and distribution industries," the firm said.
Time Warner, based in New York, "is one of the few media companies without super voting shares and has the potential to provide immediate industry scale," Barclays noted.
Additionally, AT&T could benefit by moving into the content arena despite a "full plate," the firm added.
But the financial benefits of the deal are not as readily apparent, according to Barclays.
"Therefore, the logic for the transaction would largely have to be predicated on competitive necessities, opportunity costs and revenue synergies with benefits unlikely to accrue immediately," Barclays noted.
Shares of AT&T were up in mid-afternoon trading on Thursday.
Separately, TheStreet Ratings objectively rated Time Warner 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 B.
The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, notable return on equity, reasonable valuation levels, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: TWX