DALLAS & NEW YORK—WarnerMedia, which is owned by AT&T, and Discovery Inc. have reached an agreement to form a standalone global entertainment company that will combine WarnerMedia’s entertainment, sports and news assets with Discovery’s nonfiction and international entertainment and sports business.
With the deal, WarnerMedia and Discovery will merge its leadership teams, content creators and content libraries, with nearly 200,000 hours of programming from brands like HBO, Warner Bros., Discovery, HGTV and more, the announcement detailed. It is also poised to help accelerate both companies’ plans for direct-to-consumer streaming services, which already are available via HBO Max and Discovery+.
“The new company 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,” the official press release said.
Discovery President and CEO David Zaslav has been tapped to lead the new company. Zaslav will also serve on the new company’s board of directors, which will consist of 13 members in total—seven appointed by AT&T, including the chairperson, and six, including Zaslav, from Discovery.
“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, CEO of AT&T. “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. For AT&T shareholders, this is an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity. AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend. Plus, they will get a stake in the new company, a global media leader that can build one of the top streaming platforms in the world.”
The deal has already been approved by AT&T’s and Discovery’s Board of Directors. Per the terms of the agreement, AT&T will receive $43 billion in a combination of cash, debt securities and WarnerMedia’s retention of certain debt. AT&T’s shareholders would receive stock representing 71% of the new company, while Discovery shareholders would own 29%.
AT&T and Discovery expect the deal to close in mid-2022, subject to approval by Discovery shareholders (no vote is required by AT&T shareholders) and other customary closing conditions, including regulatory approvals.
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