US telecom company AT&T has agreed in principle to acquire entertainment company Time Warner Inc. for a sum of $85 billion.

This deal is being labeled as the biggest deal of the year. After the deal becomes official AT&T will have a large number of assets under its name like HBO and CNN and also the famous Warner Bros studio.

According to reports, a deal between the two companies has been agreed on most terms and it may be officially announced as early as next week. This deal has a lot of significance as more telecom companies look to venture into content creation and distribution sector.

Online streaming is increasingly replacing traditional pay-TV packages. AT&T is trying to gain a foothold for itself in this sector. Last year, AT&T bought satellite TV providers DirectTV for $48.5 billion.

In 2014, along with Otter Media and Chernin Group, AT&T entered a joint venture to invest in media businesses and has since rolled out video streaming services.

Time Warner is one of the biggest names in the movie and TV industry currently.

Time Warner has a 10 percent stake in online video streaming website Hulu.

Recently many companies have made attempts to buy out the company. According to the Wall Street Journal, Apple had approached the company a few months ago and suggested a merger. 21st Century Fox Inc also had their $80 billion bid rejected in 2014.