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Time Warner could eye CBS for acquisition

Virginia residents may have heard that a merger between CBS and Time Warner may be reality in the near future. According to some analysts, a merger between the two media giants makes sense now more than ever. By acquiring CBS, Time Warner could expand into new markets by adding one of the major broadcast networks to its stable of media properties, which includes the Warner Brothers film studio and cable channels HBO and TBS.

CBS and Time Warner combined would bring substantial size and bargaining power to the negotiating table with cable providers. Many providers would feel obligated to carry CBS, and that leverage would allow Time Warner to demand higher carriage fees for its other cable channels. Time Warner would then be able to compete with other media giants that also own broadcast networks, such as News Corp, which owns Fox, and Disney, which owns ABC and ESPN.

CBS and Time Warner already collaborate on some projects, including the NCAA Basketball Tournament and the CW network. Both companies have also recently split from unproductive partnerships. CBS split from Viacom in 2006, and Time Warner split from AOL in 2009.

Pursuing a merger or acquisition is a common way for a company to expand scale and increase earnings. However, the merger and acquisition process can be complicated. Even relatively small transactions can involve complex details.

Companies in Virginia that are exploring merger or acquisition options could benefit from an attorney's services. An attorney with experience in business transactions could help guide the business through the process and avoid unnecessary complications and risks. The attorney could also draft legally sound transaction contracts and assist in negotiations.

Source: Bloomberg, "Time Warner, CBS seen as candidates for merger: Real M&A," Andy Fixmer and Edmund Lee, April 22, 2013

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