AT&T merges WarnerMedia with Discovery in $43bn deal
AT&T owns CNN, HBO and Warner Bros and Discovery’s channels include Animal Planet
US telecoms giant AT&T has announced a deal combining its content unit WarnerMedia with Discovery, the owner of lifestyle networks including the Food Network, in a deal worth $43bn (£30bn).
Under the terms of the agreement, AT&T said it would receive a combination of cash, debt and WarnerMedia’s retention of certain debt.
AT&T shareholders will receive 71% in stock of the new company, while Discovery shareholders will own 29%, it added.
The deal would create a new business, separate from AT&T, that could be valued at as much as $150bn including debt, according to The Financial Times.
“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,” John Stankey, CEO of AT&T, said in a statement.
“AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend. Plus, they will get a stake in the new company, a global media leader that can build one of the top streaming platforms in the world,” he added.
Discovery president and CEO David Zaslav will lead the new company. The board of directors will consist of 13 members, seven initially appointed by AT&T including the chair of the board, while Discovery will appoint six members, including Zaslav.
“It is super exciting to combine such historic brands, world-class journalism and iconic franchises under one roof and unlock so much value and opportunity,” Zaslav said.
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The new firm’s singular mission is “to focus on telling the most amazing stories and have a ton of fun doing it”, he added.
AT&T owns CNN, HBO and Warner Bros after it acquired Time Warner, since renamed WarnerMedia, for $109bn in 2018. Discovery’s channels include Animal Planet and the Discovery Channel.
HBO and HBO Max reportedly have around 64 million subscribers worldwide. Discovery said last month it had reached 15 million paying subscribers.
In contrast, Netflix currently has around 208 million global subscribers, while Disney+ recently surpassed 100 million less than 18 months after the streaming service launched.
The deal is set to be completed in 2022 subject to approval by Discovery shareholders and US regulators. No vote is required by AT&T shareholders.
Shares of Discovery were seen 14% higher in pre-market trading, while AT&T’s stock price was up around 5%.