AT& T to merge media operations with Discovery in 43 billion USD deal

U.S. telecom giant AT&T on Monday announced it will combine its media operation with Discovery Communication Inc.’s entertainment business to create a standalone company. The deal, pegged at $43 billion, will pave the way for one of Hollywood’s biggest studios to compete with rivals like media giants Netflix and Disney. The agreement would create a new business, separate from AT&T, that could be valued at as much as $150 billion, including debt, according to The Financial Times.

AT&T would receive an aggregate amount of $43 billion in the form of cash, debt and WarnerMedia’s retention of certain debt. AT&T shareholders would receive stock representing 71% of the new company, while Discovery shareholders would own 29%,.

“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 Chief Executive John Stankey said in a release.

AT&T said Discovery President and CEO David Zaslav will lead the new company, which will have a new name announced in the coming days. The new firm’s singular mission, according to DIscovery CEO David Zaslav, would be “to focus on telling the most amazing stories and have a ton of fun doing it.”

“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 platform. “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,” news agency AFP quoted AT&T CEO John Stankey as saying,

Also Read: Ola rolls out electric vehicle category on its platform in London

The latest deal is likely to give a major push to AT&T’s streaming business. The telecom major’s main streaming platform HBO Max which has struggled to gain subscribers, with some 61 million users. In comparison Netflix has a subscriber base of 204 million while 164 Disney’s platforms which include Hulu, ESPN+ and Disney+ also have 164 million users. Discovery has a presence in 220 countries, according to its website. WarnerMedia had net sales of $30.4 billion in 2020, and Discovery $10.7 billion.