AT&T’s WarnerMedia To Merge With Discovery In $43 Billion Deal

Topline

AT&T unveiled it will merge its media division WarnerMedia with Discovery in a $43 billion deal on Monday morning, to create a standalone global media conglomerate that will combine the likes of HBO, Warner Bros., and CNN with Discovery’s lifestyle and reality TV networks under a single umbrella to take on streaming giants like Netflix and Disney.

AT&T's shareholders will own 71% of the spun-off entity while Discovery stockholders will own 29%. Xinhua News Agency/Getty Images

Key Facts

The all-stock deal will see AT&T receive $43 billion in a combination of cash, debt securities and WarnerMedia’s retention of certain debt.

AT&T shareholders will hold 71% of the new company while Discovery stockholders will own 29% of the conglomerate.

The companies say the deal will allow them to strengthen their global streaming business, but it is unclear if Discovery’s current streaming platform Discovery+ and Warner’s HBO Max will be folded into a single service. 

Discovery’s President and CEO David Zaslav is slated to lead the combined entity.

The deal, which is expected to close by the middle of next year, still requires approval from Discovery’s shareholders and regulators.

Key Background

The decision to spin off WarnerMedia is a major shift for AT&T which had acquired the entity then known as TimeWarner for $85.4 billion in 2016 and even faced off against the Justice Department which had opposed the deal. The media landscape, however, has continued to rapidly shift away from traditional pay-TV and moved towards streaming services. The merged entity will likely be better positioned to take on the like of Netflix and Walt Disney as it brings several popular media brands like HBO, DC Comics, CNN, Discovery Channel, TLC, Animal Planet and others under a single roof. The companies claim the merger will bring together 200,000 hours of content. Both entities currently offer their streaming services HBO Max and Discovery+ and the merger will likely allow them to offer both as a bundle.

Tangent

The deal, however, has sparked some concern among WarnerMedia employees who have experienced three massive restructurings and a round of mass layoffs since 2018, Variety reported.

Further Reading

AT&T, Discovery join media houses as cord-cutting encroaches (Associated Press)

AT&T Board Meets as Discovery Merger Discussions Accelerate; Shock Reverberates Around WarnerMedia (Variety)

How a Discovery-WarnerMedia Merger Would Rattle Hollywood (Hollywood Reporter)