AT&T to Spin Off Its Interest in WarnerMedia in a $43B Transaction

WarnerMedia Discovery
(Image credit: WarnerMedia; Discovery)

DALLAS—AT&T has provided new details on the financial structure of the previously announced merger between Discovery and WarnerMedia by announcing that it will spin off its interest in WarnerMedia to shareholders when the merger between Discovery, Inc and WarnerMedia closes in the second quarter of 2022. 

As part of the deal, AT&T will receive $43 billion (subject to working capital and other adjustments) in a combination of cash and other consideration when the deal closes, and AT&T’s shareholders will receive stock representing approximately 71% of the new company, Warner Bros. Discovery, Inc. (WBD). Existing Discovery shareholders will own approximately 29% of the new company.

AT&T has been selling off its media assets so it can reduce its debts and focus on investing in its 5G networks. 

“In evaluating the form of distribution, we were guided by one objective — executing the transaction in the most seamless manner possible to support long-term value generation,” said AT&T CEO John Stankey. “We are confident the spin-off achieves that objective because it’s simple, efficient and results in AT&T shareholders owning shares of both companies, each of which will have the ability to drive better returns in a manner consistent with their respective market opportunities.

“We believe that the remaining AT&T and the new WBD are two equities that the market will want to own and the markets to support those equities will develop,” Stankey continued.  “Rather than try to account for market volatility in the near-term and decide where to apportion value in the process of doing an exchange of shares, the spin-off distribution will let the market do what markets do best. We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent.”

Following the closing of the transaction, the WBD common stock is expected to be listed on the NASDAQ Global Select Market under the ticker “WBD.” 

WBD expects to realize cost synergies of over $3.0 billion on a run-rate basis by the end of the second full year after the closing of the transaction as a result of technology, marketing and platform efficiencies, AT&T said. 

As previously announced, Discovery president and CEO David Zaslav will lead WBD. 

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 has designated six members, including Zaslav.

AT&T also announced that it will slash its dividend from $2.08 to $1.11 per share.

George Winslow

George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.