On Monday, AT&T and Discovery announced a deal under which their media assets will be combined into a new publicly traded stand-alone media company.
The deal subject to regulatory approval will combine two treasure troves of content, including the HBO Max and Discovery+ streaming services.
The companies announced that Discovery president and CEO David Zaslav will lead the new company with a best-in-class management team and top operational and creative leadership from both the companies.
The new company will compete globally in the fast-growing direct-to-consumer business bringing compelling content to DTC subscribers across its portfolio, including HBO Max and the recently launched Discovery+.
The new deal will be able to invest in more original content for its streaming services, enhance the programming options across its global linear pay TV and broadcast channels, and offer more innovative video experiences and consumer choices.
AT&T CEO John Stankey said, “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. 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.”
Discovery president and CEO David 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…consumers with more diverse choices, talent and storytellers with more resources and compelling pathways to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet that is better positioned to compete with the world’s largest streamers.”
He further added, “We will build a new chapter together with the creative and talented WarnerMedia team and these incredible assets built on a nearly 100-year legacy of the most wonderful storytelling in the world. That will be our singular mission: to focus on telling the most amazing stories and have a ton of fun doing it.”
AT&T would receive $43 billion (subject to adjustment) in a combination of cash, debt securities, and Warner Media’s retention of certain debt, and AT&T’s shareholders would receive stock representing 71 per cent of the new company; Discovery shareholders would own 29 per cent of the new company.
The new company’s board of directors will consist of 13 members, seven initially appointed by AT&T, including the chairperson of the board; Discovery will initially appoint six members, including CEO David Zaslav.
AT&T houses brands like CNN, HBO, Cartoon Network, TBS, TNT, and Warner Bros. Discovery owns networks such as HGTV, Food Network, TLC, and Animal Planet. This is the largest media merger since Viacom and CBS combined their businesses to form ViacomCBS in December 2019.
The executives leading the transaction said they’ll announce a name for the spun-off company later this week and they expect the deal to take effect in mid-2022.