Updated with information from conference call: The AT&T-Time Warner deal is now official, and here are the key terms:

The telco agreed to pay $107.50 a share, half cash and the other half in stock. That comes to $85.4 billion, or $108.7 billion if you include Time Warner’s debt.

When it’s done, Time Warner shareholders will own as much as 15.7% of AT&T. The entertainment assets will account for about 15% of AT&T’s revenues.

They expect the deal to close by the end of next year following an antitrust review by the Justice Department. The FCC also likely will pay a role in the process although AT&T and Time Warner say that they are “currently determining which FCC licenses, if any, will be transferred to AT&T in connection with the transaction.”

The partners say that the merged company will become the “first U.S. mobile provider to compete nationwide with cable companies in the provision of bundled mobile broadband and video.”

They also intend to “deliver more innovation with new forms of original content built for mobile and social, which builds on Time Warner’s HBO Now and the upcoming launch of AT&T’s OTT offering DirecTV Now.”

Time Warner CEO Jeff Bewkes said in a conference call that he’ll depart after a transition period, leaving AT&T chief Randall Stephenson in charge. “We’re going to figure it out together how long I should be part of that. It is probably a reasonable period of time…I’m planning to do this as long as I can help the company.”

The telco chief called the arrangement “open-ended.” The Time Warner CEO will be sure that “we have the right people in the right seats.”

Bewkes added that he expects “all of our creative and business execs to go on for many years.”

Asked specifically about the role Peter Chernin will play, Stephenson said that he “doesn’t have any idea what Peter’s plans are.” The Hollywood exec “has his hands full right now” — including at Otter Media, his programming joint-venture with AT&T.

The AT&T CEO calls this a “perfect match” by uniting “the world’s best premium content with the networks to deliver it to every screen.”

But the companies were vague about benefits consumers would see.

Bewkes noted that it will be easier to change distribution practices by putting the two companies under one roof. For example, he said that cable companies were slow to roll out video on demand.

“They basically kept their VOD rights hostage to individual negotiations and contract renewals,” he says. “That’s not a way to bring a revolution to consumers.”

Execs also say that they’ll make it easier for people to search for programming, and will give them a broader variety of subscription packages. Bewkes says that the merged company will find ways to have advertisers foot more of the costs to provide entertainment.

“That can be a win-win,” he says. “We all like advertising messages if the thing we’re seeing is relevant to us. Think of a magazine. You don’t want a magazine with no ads….That’s how we got to the view that this would be a real game changer.”

Time Warner is on the hook to pay AT&T $1.7 billion if the entertainment company receives, and wants to take, a higher offer, the Wall Street Journal says. If the partners stay together but federal regulators oppose the union, then AT&T has to pay $500 million to Time Warner.

AT&T will finance the acquisition with a $25 billion loan from J.P. Morgan Chase and another $25 billion from Bank of America Merrill Lynch. It also can tap $40 billion from an unsecured bridge loan.

The company expects the deal to result in $1 billion in annual cost savings within three years as well as “incremental revenue opportunities that neither company could obtain on a standalone basis.”

Bewkes and Stephenson began talking seriously about a merger in late August as they compared notes about media convergence.

“We began to discuss, at first philosophically, and then the more we talked about it the more it fell into place,” Bewkes says.

Stephenson denied that he moved quickly on the negotiations because other companies were kicking Time Warner’s tires. Time Warner “wasn’t up for sale,” he says. Bewkes added that “we don’t have any activity like that.”

Here’s the announcement: