The merger of the two largest online video companies will create the world’s largest digital media company.
Time Warner and AOL are set to announce the merger in New York today.
The companies said Thursday they plan to share more information in coming weeks.
Read moreThe merger of both companies, based in the San Francisco Bay Area, will allow Time Warner to take over the AOL brand and more than a dozen other properties, including ESPN, TNT, Cartoon Network and Warner Bros. and Disney.
The deal would create the largest entertainment company in the world.
The combined company would control the TV, Internet and movie companies, including HBO, HBO Go, HBO Now and Showtime.
The merger would also give Time Warner a stake in NBCUniversal, which owns ESPN, Disney and 21st Century Fox.
It would allow Time-Warner to control its content portfolio including its film and television businesses.
The companies have been preparing to unveil the deal since mid-October, and a public filing with the Securities and Exchange Commission shows that the merger has been under review for more than two years.
A formal announcement is expected this week.
The news comes as Time Warner’s stock is on track to record its largest quarterly loss in five years, after a year of strong gains.
The company has seen its shares drop about 10% this year.
In a conference call Thursday, Chief Executive Steve Ballmer said the merger would boost both companies’ profits.
The combined company will have a larger workforce and will be able to expand its reach, he said.
“This will be a powerful combination of two companies with great brands,” Ballmer added.
On Friday, Time Warner said that it expects to generate more than $6 billion in annual revenue from the merger.
The deal would bring together the nation’s second-largest media company with a network that has nearly 7 billion monthly active users, including Hulu and other online video providers.
The announcement comes as the technology industry grapples with an increasingly aggressive takeover threat from online video services such as Netflix and Amazon.
The push for greater control over online content has been driven by companies such as Facebook and Google, which want to control content distribution and monetize it.
Time-Werner has been seeking to keep some of its properties, but also has an opportunity to grow its own online video properties.
In the wake of the merger, Time-Wall Street was down 7.8% to $25.25 in afternoon trading.
(This version of the story corrects to show Time Warner owns Hulu, not ESPN)