AOL Time Warner has taken full control of Time Warner Entertainment (TWE), the business that owns Warner Bros. studios and cable channels HBO, Court TV and Comedy Central, with a $9bn acquisition of the telecommunication giant AT&T's 27% stake.
The deal ends two years of negotiations between AOLTW and AT&T over the share holding. AOLTW is offering a mix of its own stock, shares in a new cable TV company as well as around $2bn in cash for the stake.
Although the broad framework of the deal was established Monday, the two sides are understood to have been haggling over the crucial issue of whether AOLTW retains access to AT&T's cable network. The media giant needs the access to grow its high-speed internet and cable channels businesses.
Analysts welcomed the move, which they expect to exert a positive influence on AOLTW's share price. Shares in the media giant have fallen by over 70% this year, hit by record write-downs of $54bn, growth fears and the ongoing investigation by federal authorities into alleged accounting irregularities at AOL.
"A TWE restructuring should remove a strategic overhang and a cloud of uncertainty around AOL Time Warner's stock," said JP Morgan analyst Jason Bazinet in a research report.