AT&T Inc. is in advanced talks to acquire Time Warner Inc., according to people familiar with the matter, a deal that would create a new hallmark in the rapidly converging realms of media, communications and the internet. A deal, which could happen as early as this weekend, would unite AT&T’s portfolio of wireless, broadband and satellite TV services with Time Warner’s entertainment empire, which includes cable networks such as TNT, TBS, CNN, the coveted premium channel HBO, and the Warner Bros. film and TV studio. The talks toward what likely would be a cash-and-stock deal have come together quickly, are fluid and still could fall through, according to people familiar with the matter. An agreement also could be delayed, they said. Time Warner shares rose 7.7% to $89.37 in midafternoon trading, while AT&T fell 3% to $37.50. A merger of the companies would be the most ambitious marriage of content and distribution in the media and telecom industries since Comcast Corp.’s 2011 purchase of NBCUniversal and would create a behemoth to rival that cable giant. A transaction would be far and away the biggest media deal of recent years. Time Warner has a market capitalization of $71 billion, while AT&T’s was $231.7 billion. A deal likely would get intense regulatory scrutiny. Regulators have showed misgivings about the Comcast-NBCU deal—in particular, whether obligations placed on Comcast were enforceable—so it’s unclear if they will be willing to entertain another such merger. It’s possible other bidders for Time Warner could emerge quickly to challenge AT&T, including traditional media conglomerates or tech companies such as Apple Inc. and Google Inc., media executives and analysts say. Time Warner likely would want at least $100 a share, which would be a $105 billion transaction or more, according to Marci Ryvicker, an analyst at Wells Fargo. A deal at $100 a share in cash and stock still would add 4% to AT&T’s estimated 2018 earnings per share and shouldn’t require a dividend cut, J.P. Morgan analyst Philip Cusick wrote in a research note. A sale of Time Warner to AT&T would have echoes of the blockbuster 2000 AOL-Time Warner merger—then the largest deal of all time. That was a different bet on a converged media future, one in which AOL’s internet service would have complemented and boosted Time Warner’s content. But the merger ultimately proved a failure, hurt by the unraveling of the dot-com boom, a clash of cultures and poor assumptions about the way each business could help the other. Dallas-based AT&T, led by Chief Executive Randall Stephenson, has been reshaping its strategy in recent years, as the U.S. cellular business became saturated and years of consolidation in that sector left no room for major deals. AT&T’s attempt to buy T-Mobile was killed by regulators in 2011. Instead, AT&T turned to video, with the nearly $50 billion acquisition of DirecTV last year, instantly making it the biggest player in pay television. That pay TV business faces headwinds as more consumers cut the cord or look to trim their monthly bills, with streaming services providing new competition in the marketplace. With its newfound scale, AT&T spent the past year aggressively negotiating deals with content companies, with plans to launch an over-the-top video service by year’s end. Owning Time Warner could offer AT&T a new lane to pursue growth and bring assets that would help along those streaming media ambitions. For AT&T, the deal would eclipse DirecTV and may be the biggest deal since paying $85 billion for BellSouth in 2006. With $117.3 billion in long-term debt at the end of June, a Time Warner deal could give the company the world’s largest balance sheet with debt hitting almost $200 billion, according to analysts at New Street Research. The issuance of new stock, a common move in AT&T’s deal making, increase its total dividend costs, above the almost $12 billion in current annual payouts. After the cellular business became saturated, AT&T turned to video, buying DirecTV last year for almost $50 billion. If AT&T ends up owning Time Warner, the deal would eclipse the DirecTV one and may be the biggest since paying $85 billion for BellSouth in 2006. PHOTO: BLOOMBERG NEWS Bloomberg reported Thursday that senior executives of AT&T and Time Warner had met in recent weeks to hold preliminary discussions on various business strategies, including a possible merger. Sixteen years since the AOL-Time Warner deal, much has changed, and the mashup of mobile, broadband and TV that has long been anticipated has been taking shape quickly. Consumers are streaming shows on phones and tablets, signing up for TV services without a connection from a traditional cable or satellite provider, and doing much of their media consumption on social media platforms such as Facebook. Time Warner CEO Jeff Bewkes has positioned his company as a pure content player in recent years, spinning off AOL as well as the Time Warner Cable pay-TV unit and the Time Inc.magazine-publishing division. In 2014, Mr. Bewkes fought off an unsolicited takeover bid from Rupert Murdoch’s 21st Century Fox, indicating Time Warner wanted a far higher price than the initial roughly $80 billion offer that was on the table. (21st Century Fox and Wall Street Journal-ownerNews Corp share common ownership.) People close to Time Warner signaled at the time that the company would prefer to test the marketplace more broadly—and potentially see if big tech or telecom players had interest down the road. At the time, AT&T was busy digesting its DirecTV acquisition, so it wasn’t a potential buyer. Mr. Bewkes has used the intervening time to try to persuade Wall Street he could run Time Warner effectively as a stand-alone outfit in a media world where a few distribution giants are achieving enormous scale. To answer the concern that Netflix and other streaming services are appealing to cord-cutters and people who never sign up for cable in the first place, he launched the HBO Nowstreaming service, which had nearly a million subscribers as of March. Time Warner also carried out cost cuts and layoffs and continued big content investments. Among media players, Time Warner is attractive to AT&T in part because it doesn’t have a big shareholder with effective control and because it is relatively well-positioned for a media world where cable TV distributors want to carry skinnier bundles of channels. Time Warner has only a few major networks—some of which, like TNT and TBS, carry high-value sports content—compared to companies that have a host of channels with small audiences. Acquiring Time Warner also would get AT&T further into the streaming business with Hulu. Time Warner bought a 10% stake in Hulu in August, joining Walt Disney Co., 21st Century Fox and NBCUniversal as an owner in the $5.8 billion video service. AT&T also is launching a DirecTV online service aimed at selling a robust package of TV channels.