The talks around the cash-and-stock deal have come together quickly, the Journal reported on Friday, citing people familiar with the matter.
Time Warner, which has a market value of about $65 billion, is an attractive target because of its premium cable channel HBO, the CNN news network, film studio Warner Bros, and other media assets.
AT&T, which has a market capitalization of about $238 billion, has already made moves to turn itself into a media powerhouse, buying satellite TV provider DirecTV last year for $48.5 billion.
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AT&T and Time Warner were not immediately available for comment.
Bloomberg reported on Thursday that executives of both the companies had discussed various business strategies, including a possible merger, in recent weeks.