AT&T and Discovery announce merger

CNN – AT&T and Discovery, Inc. announced a deal on Monday morning, under which AT&T’s WarnerMedia will be spun off and combined with Discovery in a new standalone media company.

The deal, while subject to regulatory approval, will combine all streaming content, including the HBO Max and discovery+ streaming services. CNN will be included in the transaction.

Discovery CEO David Zaslav will run the combined business, according to the announcement. “Executives from both companies” will be in “key leadership roles” according to a press release.

The deal is meant to help the companies compete with top tier streaming services like Netflix and Disney. On another level, it is also a complex way for AT&T to unwind its 2016 bid for Time Warner, which took effect in 2018, with the assets named WarnerMedia. The companies said they expect this deal to take effect in mid-2022, CNN reported.

AT&T’s shareholders would get the majority of the shares in the combined company, at 71%. Discovery’s shareholders would get 29%, CNN reported.

The release noted, “AT&T would receive $43 billion (subject to adjustment) in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt.”

Shares of AT&T were up more than 3% pre-market, while shares of Discovery were up 16%.

“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” AT&T CEO John Stankey said in a statement. “It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want.”

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