According to the latest news, today, in the morning, AT&T announced that it is spinning off its media business WarnerMedia and merging it with Discovery TV company to create a major new player in the media world that has the potential of competing with firms like Netflix and Disney who are currently market leaders in the streaming content market.
This deal will bring a lot of familiar names in the TV and film world under one roof. For example, WarnerMedia owns HBO, CNN, Cartoon Network, TBS, TNT, etc. while Discovery owns HGTV, Animal Planet, Food Network, TLC, etc. Warner Bros. is responsible for franchises like Harry Potter and Batman. Discovery. Both the companies WarnerMedia and Discovery have their own streaming platforms: HBO Max and Discovery Plus respectively.
As per the announcement, the boards of both AT&T and Discovery have initially approved the deal. Now, it would have to get signed by the regulators. For AT&T, the deal is an all stock transaction. AT&T will receive $43 billion through cash, debt securities, and debt retention on the part of WarnerMedia.
As per the deal, AT&T shareholders will receive stock worth 71 percent of the new company, while Discovery’s shareholders will get the remaining 29 percent.
The yet to be named new company will be headed by Discovery chief executive David Zaslav. In a press release, Zaslav said “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. With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins.” Interestingly, from AT&T’s perspective, this deal is a significant U turn from its previous stance. Back in October 2016, the company tried to make a deal to acquire WarnerMedia which at that time was known as TimeWarner).
During that time, the deal was valued at $85.4 billion. However, the Justice Department opposed the acquisition saying this would lead to higher prices for consumers.
It is noteworthy that at that time, according to some people, President Trump’s dislike of Warner property CNN was also a factor for this rejection. After years of wrangling in court, finally, the deal was approved in 2018 and now after three years, the two companies are looking forward to seal the deal.