Telecommunications giant AT&T is in advanced talks to acquire media and entertainment conglomerate Time Warner, a banking source familiar with the negotiations said Friday.

A deal, which could be worth $85 billion (78 billion euros) between the two companies could be announced as early as Sunday.

Should it go through, it would be the biggest deal in the world this year. Time Warner stock jumped 7.8 percent and AT&T shares fell 3.1 percent in Friday trade after the news broke.

The two companies combined are worth over $300 billion. Time Warner is expected to sell its shares to AT&T for $110 each, or about $85 billion. Should the deal be formally announced it will face scrutiny from United States antitrust regulators. Analysts believe AT&T would likely gain approval but it is unclear if certain conditions would be imposed.  

AT&T and Time Warner declined to comment.

Potential ramifications

AT&T sells wireless phone and broadband service and Time Warner owns Warner Bros., the film and TV studio, Turner Broadcasting, owner of cable networks TBS, TNT and CNN, and HBO, the largest premium cable network in the US.

This deal comes as conventional cable television is on the decline as consumers are turning to streaming content on mobile devices. Another generation of wireless technology networks, 5G, is expected soon. Access to more content would be especially attractive to wireless providers.

"We think 5G mobile is coming, we think 5G mobile is an epic game-changer," said Rich Tullo, director of research at Albert Fried & Company. Tullo added that mobile providers were in a position to disrupt paid television services.

Deals to remember, forget

AT&T has been involved in other major business moves. AT&T bought satellite TV provider DirecTV in 2015 for $48.5 billion. In 2014 it entered a joint venture, Otter Media, with the Chermin Group to provide video streaming services. It wants to produce and own TV shows, movies and other video to distribute to its pay-TV and mobile customers.

Time Warner was previously involved in a similar blockbuster deal, merging with then internet provider giant America Online (AOL) in 2000 but it resulted in massive losses for both companies before they separated. Time Warner Chief Executive Jeff Bewkes rejected an $80 billion offer from Twenty First Century Fox in 2014.

The Wall Street Journal reported Friday that Apple Inc approached Time Warner of a potential merger a few months ago. The computer giant was reported to be continuing to monitor the negotiations.

kbd/jm (AFP, Reuters)