BY Fraser Tennant
In a deal that creates one of the largest global streaming players, US telecoms giant AT&T is to combine its WarnerMedia premium entertainment, sports and news assets with streaming service Discovery's nonfiction and international entertainment and sports businesses.
Under the terms of the definitive agreement, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T will receive $43bn in a combination of cash, debt securities and WarnerMedia’s retention of certain debt. AT&T’s shareholders will receive stock representing 71 percent of the new company, while Discovery shareholders will own 29 percent.
Once the transaction is complete, the new company will compete globally in the fast-growing direct-to-consumer business, bringing compelling content to direct-to-consumer subscribers across its portfolio, including HBO Max and the recently launched discovery+.
In addition, the transaction will combine WarnerMedia’s storied content library of popular and valuable intellectual property with Discovery’s global footprint, trove of local-language content and deep regional expertise across more than 200 countries and territories.
“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,” said John Stankey, chief executive of AT&T. “It will support fantastic growth and create efficiencies which can be re-invested in producing great content to give consumers what they want.”
Moreover, Discovery president and chief executive David Zaslav will lead the proposed new company, with a management team and operational and creative leadership drawn from both companies.
“It is exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity,” said Mr Zaslav. “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.”
The boards of directors of both AT&T and Discovery have approved the transaction, which is anticipated to close in mid-2022, subject to approval by Discovery shareholders and customary closing conditions, including receipt of regulatory approvals.
Mr Stankey concluded: “This is an opportunity to unlock value and be one of the best capitalised broadband companies – a global media leader that can build one of the top streaming platforms in the world.”
News: AT&T set to end media voyage with $43 bln Discovery deal