Making Money from the AT&T & Time Warner merger

It was a sad day on Saturday when my Dad’s LA Dodgers lost, sending the Chicago Cubs to the World Series. Although I live in Chicago now, I had to go with Dad’s team, which I have embraced since I was a little girl whenever my NY Mets don’t win. Going forward, I will be cheering for the Cubs. If they win, it will be 108 years since the last championship, and there’s no way I can root against them now.  

But, Saturday also confirmed on some other news that had been percolating since Friday. If you missed it, that’s OK – all you need to know is that by Saturday, AT&T offered Time Warner (TWX) a deal to pay $107.50 per share for its stock. The two companies are now planning a merger in a deal valued at $85 billion.

TWX opened at $83.31 on Friday morning, implying a potential 29% return if it goes through – oh my! The media landscape is constantly changing, so the above table from The Wall Street Journal is the best I’ve seen on the state of what company owns what.

I’m sure you remember the AOL-Time Warner merger. That one failed miserably, but perhaps this media combination will work differently.

I am hopeful. If there aren’t too many integration issues and companies stay true to their vision - “disrupt the traditional entertainment model and push the boundaries on mobile content availability for the benefit of customers” – it might actually work.

The key question is whether you are going to figure out how to make money from this reality. Here’s what I suggest:

The first way to make money from the AT&T/TWX deal is to use this opportunity to re-evaluate how you consume media, and make some money-saving decisions or encourage your friends/family to do so.

Have you cut the cable cord recently? I cut the cable cord in the spring of 2015 and I haven’t looked back. And, we have SAVED money even though we are the ultimate streaming snobs to get the shows and movies we want – Netflix, Hulu, Amazon Prime, and Sling. Since we actually pay for these (I am not mad at you if you and your family/friends share one subscription), we saved $50 per month since we were previously paying $100 for our cable service with 125 channels that we didn’t watch. Leave a comment on my blog below on how you saved money and gotten back more time with streaming.

If you’re still on the fence, check out a New York Times article on the best ways to reconstruct your viewership experience when cutting the cord. This is the best cord-cutting article I’ve read.

Cord cutters like me, and potentially you, affect the media industry and the stocks that make them up as well.

The second way to make money from the AT&T/TWX deal is from the stocks themselves. Often, you can feel disconnected to the market. But, what this weekend reminds us is that we are so intertwined with what happens with the market. This deal happened because we, as consumers, are consuming media in a dramatically different way than we did just 10 years ago, let alone 5. Read the rest of my blog to see where you can make money from stocks.

First, check to see if you have TWX stock in any of your funds in your 401k, IRA, or brokerage accounts.

Com’on, it will be fun to see a gain. Basically, you should see a rise in the stock price near $107.50 in the short-run until deal closing. The stock will never hit that exact amount because there is risk that the merger won’t go through. Some investors will immediately sell their Time Warner stock (all or in part), if they want to take profits or they fear the deal won’t go through. Others will keep the TWX stock because they want to be part of the combined company under A&T. These could be smart money moves.

Second, check to see if you have any AT&T. You should see a fall in the price of this stock in the short-run. In most cases, the price of the acquiring company goes down a bit because it will cost money to buy the target and investor may expect the combined company to work. Over the long-term, if this deal works, AT&T could be a great money-maker stock.

Wouldn’t it be great to have some exposure to these stocks that can make you money? (Watch my video for a reminder on how to make money in stocks).

For you advanced investors, one strategy to make money is to buy an option if you are worried that the deal won’t go through – buy a put on the acquisition target’s stock, or TWX. Have no idea what I’m talking about or want to learn more about options? Let me know if this is an exciting topic for you by leaving a comment on my blog below. The more demand I see, the more I’ll know where to focus.

Highlights from the Charisse Says Community

The Charisse Say’s community’s own Jacqueline Headd was featured in American Express Open Forum. I wrote about her business success through customer service, for which she offers plenty of strategies for a business to grow. For you entrepreneurs looking to build wealth, you do not want to miss these tid bits.

Also, the Charisse Says platform is growing. I am looking to bring on an online communications guru to add to the team in November. If you’re interested, check out the description here.