AT&T, WarnerMedia and Discovery partnership is to create new media giant
AT&T said that it will spin off its media business WarnerMedia and merge it with TV Company Discovery, establishing a major new competitor in the media sector to compete with streaming content leaders Netflix and Disney
The transaction will bring together a number of well-known individuals from the television and film industries. HBO Max and Discovery Plus are two of the corporations' own streaming platforms.
The merger has been accepted by the boards of both AT&T and Discovery, but it still needs to be approved by regulators. The agreement is an all-stock transaction in which AT&T will receive $43 billion in cash, debt securities, and debt retention from WarnerMedia. AT&T shareholders will receive 71% of the new company's equity, while Discovery owners will own the remaining 29%.
The transaction fundamentally reverses AT&T's years-long strategy to combine content and distribution in a vertically integrated firm if it is approved by regulators. The agreement is anticipated to finalise in the middle of 2022, according to the companies.
Discovery President and CEO David Zaslav will manage the new firm, according to AT&T, which will be given a new name in the coming days. The board would be made up of 13 members, with AT&T appointing seven of them, including the chair, and Discovery appointing six, including Zaslav.
On a conference call with reporters on Monday, Zaslav expressed his belief that the combined firm will be able to separate itself from top streaming services like Disney+ and Netflix by providing a mix of news and sports in addition to its entertainment holdings like Game of Thrones and Harry Potter.
According to the Financial Times, the new Warner Media-Discovery merger will become the world's second largest media company by revenue after Disney, with an enterprise value of $132 billion. Synergies between the two businesses are expected to save the corporations roughly $3 billion per year, which they say would be reinvested in content.
According to reports, HBO and HBO Max have roughly 64 million customers globally. Last month, Discovery announced that it had reached 15 million paying customers.
Netflix, on the other hand, has about 208 million global customers, while Disney+ recently topped 100 million subscribers less than 112 years after its start.