Filed by AT&T Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a12
of the Securities Exchange Act of 1934
Subject Company: Time Warner Inc.
Commission File No.: 1-15062
CNN
INTERVIEW
OCTOBER 24, 2016
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00:00:03;10 AT&T and Time Warner,
the parent company of CNN, have agreed to an $85 billion megamerger. The move was announced Saturday evening, it will be subject to a review by regulatory approval, which could take more than a year to complete. This deal helps AT&T expand
beyond wireless and internet service and move into content.
00:00:23;03 Time Warner is also the
parent company of TNT, HBO, Warner Brothers Studio, and more. So for more on this blockbuster deal, lets turn to CNN chief business correspondent and Early Start anchor, Christine Romans (PH), who is joined by the heads of both companies. Hey,
Christine.
00:00:38;07 Hi. Its literally a
big deal, Allison (PH). (LAUGH) Thank you. Joining me right now, Jeff Bewkes (PH), the chairman and CEO of Time Warner, and Randall Stephenson (PH), the chairman and CEO of AT&T. Gentlemen, thank you
00:00:48;17 Congratulations.
00:00:49;06 Mornin. Thank you.
00:00:50;03 Lets talk, Randall,
why why buy Time Warner?
00:00:54;27 It w seems to us like
a very natural extension of what we do. Were in a in an environment where our customers are demanding more and more video, more and more entertainment content, not only on the TV but on the mobile device. And we have a really large
customer base in in mobility. And the ability to take really premium-quality content to our customers in the mobile environment is huge for us.
00:01:18;19 Its huge for our
customers, and as we made the scan and looked for premium content to bring to our customers, this is the premium content we think on the planet right now, and so the ability to do something special like this with Time Warner is just a very
natural extension for us.
2
00:01:35;11 Why sell now, Jeff?
00:01:37;21 Well, its not really
selling. Its joining. And so
00:01:40;24 All right
00:01:42;05 this is our biggest
customer. Its our biggest partner. Direct TV AT&T, and then all these mobile customers that we now will have together. And what it allows us to do is just move faster, with more innovation, better consumer offerings, more different
price points, more effective advertising, and therefore people are gonna see that more of the cost of content can be borne by advertising. And the experience of watching television can be better.
00:02:11;10 So what changes, for the
consumer? For somebody watching us right now, Randall, what changes for them, with these two companies together?
3
00:02:18;18 Oh, I I think
youre gonna see the pace of innovation, in terms of delivering meaningful premium content to the to the customer on mobile devices. That pace of innovation is whats going to change. And and we all are trying to innovate in
this way.
00:02:32;12 And
and our experience is when youre trying to do meaningful innovation and bring new product and capability to market, doing it in arms length contracts is always really, really hard. And so you put these two companies together, and now the
two companies are working together to change how the customer experiences entertainment, how the customer experiences CNN.
00:02:52;18 Literally, it
thats what we think will change. The customers demanding not only the entertainment, and not only the content, but the ability to integrate social, doing clipping and posting and then social interaction with their content. So,
these are the kind of things we really want to move fast
00:03:07;02 Talk to me more about how
you see the future audience consuming this stuff? You know, youve got this young millennial who d in in many cases, they dont wanna ever have a cable package, right? Theyre viewing this content differently.
How does this deal see that or feed that?
4
00:03:22;24 So, the millennials and
peop in fact, the our customer base in general is not consuming less content. Our our our customers are consuming more premium content today than theyve ever consumed. But theyre consuming it in different places.
00:03:36;27 Theyre not
consuming it just on the television in their living room. Theyre consuming it now on their tablet. Theyre consuming it on the mobile device, on the go, and theyre consuming it everywhere. And it its really stark, if you
look at the the amount of volumes, how theyre increasing traffic going to these mobile devices
00:03:52;21 thats
video-driven. And so were we see that continuing, but we see that if we can actually innovate and and curate the content differently and bring to the customer differently, we actually think this doesnt slow down. This
accelerates. And thi this is the the really important thing here, because were really excited about as this accelerates, as this demand for premium content on these mobile devices continues to grow, it gives us more and more
incentive to invest more and more
5
00:04:20;07 Right
00:04:20;13 in
infrastructure
00:04:21;11 and innovatin
infrastructure; this idea of 5G technology.
00:04:24;20 What is that?
00:04:25;26 Its the next
generation of mobile technology. So think about the fastest internet speed you get from the cable company is a gig, right?
00:04:33;29 Right
00:04:34;08 that we
you can buy a gig of speed. 5G will allow us to provide a gig of speed to you wirelessly. And as we innovate this kind of content, having a one-gig wireless network so our customers now can can stream any kind of content, any kind of video
anywhere, ultimately we think well be competing head-to-head with the cable companies with a wireless offer. We can hit those kind of price points, combine it with this kind of content. We think this is exciting.
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00:04:59;06 You know (?), were
talking about that that cable-free customer, the customer who wants to be cable-free. And Time Warner well, you and I have talked about some of the things that Time Warner has already been doing
00:05:07;02 Uh-huh (AFFIRM)
00:05:06;29 to sort of see
this FilmStruck (PH), for example, you know?
00:05:09;26 Yeah
00:05:10;01 Talk to me a little bit
about how this deal how this deal fits into that?
00:05:17;04 Well, weve had a
progression for years. We wanted to have more video on demand. That was launched at HBO about 15 years ago. And then progressively weve seen Broadband delivery give us more VOD service. Think of Netflix, think of Hulu, think of Amazon.
And we added FilmStruck, which is for film buffs.
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00:05:35;27 Weve got HBO Now
available, so you can subscribe to that without adding anything else. You can do it a number of ways. And I think what were gonna see is with this kind of a platform, and you know, we believe thisll be essentially a catalyst to more
competition, more innovation, and what wed like to see is all the distributor companies basically doing more choices, more experiments. And we think this will if consumers like the kind of packages, and more competition leads to
more (UNINTEL) it leads to lower prices, it leads to happier consumers, and it tells us where to go.
00:06:13;22 So eight weeks ago, you
first met in this building to dis to start kind of talking about this thats pretty quick for such a big merger. Tell me a little bit about the timing here, because we are in the midst of what is I think the most populist
presidential election in modern history, where you know, big is bad. And Im wondering if if if that timing played had any effect on you guys?
00:06:34;27 No, it had no
00:06:35;26 No
8
00:06:36;03 effect on it. I
00:06:37;20 I came to see Jeff, because
our our businesses obviously
00:06:41;08 Right
00:06:41;21 do a lotta lot
together, and and we buy a lot of Time Warner content. And so we see each other regularly. We get together regularly. And came by to see Jeff. We had lunch. And as we began to talk, me about where I saw the world if distribution going,
5G that weve spoken of here this morning, and and where he saw the the world of content and premium content moving and and we just (LAUGHTER) really came to an agreement that these things are converging. And
theyre gonna confer converge very, very quickly
00:07:10;19 Just think how I
mean, a movie studio and a phone company. I mean, you think about how quickly things have really changed, in terms of both of your both of your businesses. Im wondering about the regulatory scrutiny. I mean, you look at the front
page of the papers today, and you know, immediate opposition is almost in every single headline or first paragraph.
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00:07:27;00 Weve heard folks on
the campaign trail talking about Hillary Clinton, has said that she will you know, her her spokesman said that they will, you know, give it scrutiny if if she is President. Donald Trump says it shouldnt be allowed to
happen. Are and there will be hearings in Congress, no question. Are you worried about the regulatory scrutiny at all?
00:07:41;21 Well, o obviously
were very attentive to it. Weve (LAUGH) weve announced a lot of big deals, and this this is not too much different than what weve seen in the past. This deal is unique though, from any deal that
weve ever done of any size. And in fact, its its unique in this regard; this is a true vertical integration of two companies.
00:07:59;02 Explain what that means. It
means it it means its not as if
00:08:01;07 Yeah
00:08:01;08 two companies do the
same thing already?
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00:08:03;11 Yeah, so think about
AT&T, when we tried to by T-Mobile. That was
00:08:08;10 Right
00:08:08;15 a horizontal
integration. That was a concern that the government had, is that a competitor was viewed to be taken out of the market. This transaction is not horizontal. We we dont compete. In fact, its vertical. Jeff is a supplier
00:08:20;26 Right
00:08:21;04 to AT&T. His
content is is part of our package we buy. Vertical integrations have a very standard review in the regulatory process. And theres not a r theres not a competitor being taken out, and in fact youre hard-pressed to
find in either one of our industries a time when a vertical integration was shot down by regulators. Generally what happens is where the regulators have concerns with the a merger like this, theyll put conditions on it, and impose
conditions to help remedy the concerns that they may have
00:08:49;25 And youre ready for
that?
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00:08:50;28 Yeah, were
00:08:51;08 were ready for
a review. We we expect it to be a vigorous review. Like you said, were sure that well get a chance to visit with Congress and tell our story there. But we feel like the the information and the data will drive this, and
the law will drive this.
00:09:02;16 This has been
compared some have been raising the Comcast/NBC merger, and saying, you know, that there was some you know, its been sued for failing to keep some promises that it had made under that deal. Do you does that hurt you? Does
some of the the the armchair quarterbacking after that deal, does it hurt you here at all?
00:09:17;29 No, I mean look, when
the the regulators looked at Comcast/NBCU (?), the biggest concerns at that time there were two of em, right? Net neutrality, needed to ensure that they protected net neutrality
00:09:27;29 Right
12
00:09:28;20 and over-the-top
video. And I think (LAUGH) if you look at this transaction six years after that, the net neutrality debate; I think its over. I think
00:09:36;04 Yeah
00:09:36;07 the the
the case was settled by the circuit court. And I think net neutrality is behind us. Over-the-top, I think Netflix is somehow gonna make it. (LAUGHTER) I think theyre gonna pull through. I think theyre gonna make it, right?
00:09:47;21 Let me ask you about CNN
and its in independence here because CNN is just one of the many, many name brands that are in in the Time Warner stable. But you have said that AT&T will not be reaching to
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MEDIA ID: HTTP://APP.CRITICALMENTION.COM/APP/#CLIP/SHARE/24649632?TOKEN=012B1816-2933-4871-B6E8-E195FBBF3A3D
00:00:00;05 You have said that
AT&T will not be reaching into how CNN does its business or tells its stories.
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00:00:06;07 I I watch how Jeff
manages this business today. And I I think its a model for how we want to manage it in the future. And, look, I I think of a brand like CNN. And the key variable of your brand is your independence. And when people watch CNN, are
they getting an independent assessment and reporting of the news? The last thing we want to do as AT&T is in any way taint that in the slightest bit.
00:00:30;14 And youre sure
they they understand the separation of of of
00:00:33;25 Yeah.
00:00:33;28 all that? (THROAT
CLEARING)
00:00:35;03 You know, s
youve been at CNN for many years. And its been owned by Time Warner. Has it been interfered with? I think no.
00:00:42;05 No.
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00:00:42;17 And why? There are two
things. People watch news channels if they trust them to be independent, honest, and objective. Thats always the challenge. And when youre looking for the best journalists in the world, you would only work at a news channel that lived up
to that standard.
00:00:59;28 What changes for the Time
Warner brand? You stay on for how long?
00:01:04;19 Well, at least a few years
after the clo well well all well all do it as long as were useful for the new company.
00:01:11;21 This is great
00:01:11;28 And
00:01:12;02 Its the first time
Ive heard him say a few years. (LAUGH) This is a really big moment.
00:01:15;03 And you have the tape. You
can always (LAUGH) reroll the tape.
00:01:17;02 Yeah. Well, weve got
a year to get to the to the get to the close. And then we need some period of time. But we have some tremendous executives in both of our companies
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00:01:26;07 And you think
00:01:26;16 that are gonna
be you know, we were always tryin to build the next generation.
00:01:30;24 Trying to build the next
generation. So you keep Time Warner sort of operating those brands as they are now with the leadership they have now?
00:01:38;01 Yeah.
00:01:38;06 Absolutely.
00:01:38;24 And move forward. At what
point you know they operate as two sort of separate companies? AT&T and Time Warner?
00:01:45;08 Yeah. I mean, you should
think of Time Warner (NOISE) becoming a wholly owned subsidiary of AT&T. And look. I mean, Jeff has built an amazing company over here with some amazing brands. And I dont envision us stepping in here and, like, were
gonna fix this.
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00:01:59;10 I mean, this is a well-run
company. In fact, I said at the very beginning I think this is the p premium content brand company in the world. So I dont envision us changing a lot with it. What we do want to figure out and this will be the management art that
we have to figure out.
00:02:13;08 And that is how do we begin
to think differently about curating this content and and formatting this content in new ways where we can get it to our customers in different ways, in different formats. And and getting that seamlessly working across two companies, that
will be the management art we have to figure out.
00:02:28;13 So tell me again. I
mean what were talking about here is how what what contents gonna look like in five years and how together you guys can can harness it and get it to people. But for consumers, you know, they want to know
whats gonna change for them. Their their bills? You know their phone bills? Their their cable bills? What is the biggest thing that theyll notice differently you think?
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00:02:47;23 Theyre gonna have
more choices of different channel packages. If they want a big package of a lot of channels on their big screen TVs, and they can watch the show, and walk out the house with a tablet, and have seamless connection. Or maybe they dont want that.
Maybe theyve got its a young couple that wants to use mobile devices to watch. Maybe they dont want the full package of channels. Therell be more choice. I think better prices for consumers. Therell be
00:03:13;08 You think better prices for
consumers?
00:03:14;11 Yes. More competition
usually leads to more price reduction.
00:03:20;25 Ill give you a
classic example of this. Youll see this actually next month. And that is one thing weve been working on since we closed on the DirecTV acquisition is a purely over-the-top content package. Its were calling it DirecTV
Now. This is a mobile-centric, purely over-the-top package thats going to our consumers.
00:03:40;18 This is going to be a
radically lower price point than what the consumers expecting or has has typically paid. And its gonna be 100-plus channels. Were not talking channels that nobody watches. This is 100 plus premium channels. All of this
content
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00:03:53;09 will be on there.
ESPN. The Disney content. This is a very, very different experience. Mobile centric is designed for the tablet and the smartphone. Now, think about having an anchor tenant like Time Warner, whose content is in here, and HBO, and that content and how
you can begin to integrate social into this.
00:04:11;05 And social interaction.
And and can we clip the content, and send it to friends, and and interact with our friends on this? These are the kind of things that we think are gonna iterate much, much faster and change how the customer experiences content.
00:04:23;09 Jeff, let me ask you about
your legacy at this company. I mean youve I mean, youve been what what are your thoughts I guess?
00:04:30;26 Well, I think its our
company. Its its
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00:04:32;24 Youre in it, too.
Look this company invented the magazine. It invented satellite-delivered non-ad-supported TV at HBO. It invented 24-hour news at CNN. And so were very proud of the mission of informing people, of telling authentic stories. And this
will help us to do even more investment, even more variety, and keep evolving the distribution system.
00:05:00;24 Thats what this is
about, is making sure that the breakthrough content that were seeing an explosion, not just in (NOISE) our company but in all the television companies. We need to get this out across the world in a way that harnesses the 21st century of mobile
devices, broadband delivery, VOD. Theres so much programming. You need a good interface (LAUGH) to figure out what is what do I wanna watch. And thats what thisll help.
00:05:24;15 And more hours of the day
to watch it frankly
00:05:25;20 Yeah.
00:05:26;01 Thats (LAUGH) right.
Yeah
00:05:26;13 Jeff Bewkes, Randall
Stephenson, thank you gentlemen so much.
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00:05:28;10 Thank you so much
00:05:28;28 Christine.
00:05:29;20 Chris?
00:05:30;18 All right. Great interview,
Christine. Thank you very much. So what needs to happen for this AT&T-Time Warner deal to come to fruition? And whats the (MUSIC) plus-minus for you? Up next, our media experts will take you through the deal. Next.
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Cautionary Language Concerning Forward-Looking Statements
Information set forth in this communication, including financial estimates and statements as to the expected timing, completion and effects of the proposed
merger between AT&T and Time Warner, constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the rules, regulations and releases of the Securities and
Exchange Commission. These forward-looking statements are subject to risks and uncertainties, and actual results might differ materially from those discussed in, or implied by, the forward-looking statements. Such forward-looking statements
include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, the combined companys plans, objectives, expectations and intentions, and other statements that are not historical
facts. Such statements are based upon the current beliefs and expectations of the management of AT&T and Time Warner and are subject to significant risks and uncertainties outside of our control.
21
Among the risks and uncertainties that could cause actual results to differ from those described in the
forward-looking statements are the following: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, (2) the risk that Time Warner stockholders may not adopt the merger
agreement, (3) the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated, (4) risks that any of the closing conditions to the proposed merger may not be satisfied in a
timely manner, (5) risks related to disruption of management time from ongoing business operations due to the proposed merger, (6) failure to realize the benefits expected from the proposed merger and (7) the effect of the announcement of the
proposed merger on the ability of Time Warner and AT&T to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally. Discussions of additional
risks and uncertainties are and will be contained in AT&Ts and Time Warners filings with the Securities and Exchange Commission. Neither AT&T nor Time Warner is under any obligation, and each expressly disclaim any obligation, to
update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Persons reading this communication are
cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be
made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information and Where
to Find It
In connection with the proposed merger, AT&T intends to file a registration statement on Form S-4, containing a proxy
statement/prospectus with the Securities and Exchange Commission (SEC). AT&T and Time Warner will make the proxy statement/prospectus available to their respective stockholders and AT&T and Time Warner will file other
documents regarding the proposed merger with the SEC. This communication is not intended to be, and is not, a substitute for such filings or for any other document that AT&T or Time Warner may file with the SEC in connection with the
proposed merger. STOCKHOLDERS OF TIME WARNER ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT AT&T, TIME WARNER AND THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about AT&T and Time
Warner once they become available, without charge, at the SECs website, http://www.sec.gov. Copies of documents filed with the SEC by AT&T will be made available free of charge on AT&Ts investor relations website at
http://phx.corporate-ir.net/phoenix.zhtml?c=113088&p=irol-sec. Copies of documents filed with the SEC by Time Warner will be made available free of charge on Time Warners investor relations website at
http://ir.timewarner.com/phoenix.zhtml?c=70972&p=irol-sec.
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Participants in Solicitation
AT&T, Time Warner and certain of their respective directors and executive officers and other members of management and employees may be deemed to be
participants in the solicitation of proxies from the holders of Time Warner common stock in respect to the proposed merger. Information about the directors and executive officers of AT&T is set forth in the proxy statement for AT&Ts
2016 Annual Meeting of Stockholders, which was filed with the SEC on March 11, 2016. Information about the directors and executive officers of Time Warner is set forth in the proxy statement for Time Warners 2016 Annual Meeting of
Stockholders, which was filed with the SEC on May 19, 2016. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement/prospectus regarding the proposed merger when it becomes available and
other relevant materials filed with the SEC. These documents will be available free of charge from the sources indicated above.
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