NEW YORK (TheStreet) -- Time Warner (TWX) agreed to be bought by AT&T (T) for $85 billion over the weekend in a deal that will benefit the consumer by increasing competition in the market, Time Warner CEO Jeffrey Bewkes said on CNBC's "Squawk Box" on Monday morning.
The idea of a potential deal first came up when Bewkes and AT&T CEO Randall Stephenson were having one of their regular lunches together about two months ago, he said.
During this particular meeting the two businessmen were talking about what was happening in the media landscape, such as subscription video on demand networks or the popularity of video consumption on mobile devices, and what distribution companies needed to do in response.
The two men realized that by merging the two companies together, they could "create more innovations for consumers," which would lead to increased competition and lower prices for the consumer, Bewkes explained.
In addition, the deal will lead to "more effective" advertising, or ads that are more useful to the consumer, he added. That means that advertising revenue will rise and be able to pay for more of the programming, which will again lower prices for the consumer, Bewkes claimed.
"If you look at last year, more than half the growth in advertising in the U.S. went to two companies - Alphabet's (GOOGL) Google and Facebook (FB). We need to increase competition for advertising across television and Internet companies. That's an important thing and when you do that, what you end up with is more of the burden being born by advertising companies and less of it being born by consumers," Bewkes said.
