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AT&T and Discovery to Enter a $43 Billion Merger

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AT&T the biggest telecom company in the US has decided to do a merger with Discovery. The deal is to create a new streaming giant.

Both the firms have agreed to combine WarnerMedia’s premium entertainment, sports and new assets with Discovery. This will create a separate global entertainment company.

The terms of the agreement state that AT&T would receive $43 billion. It includes cash, debt securities, and WarnerMedia’s holding of certain debt. Its shareholders would receive stock representing 71% of the new company, while discovery shareholders will hold 29%.

The boards of directors of both companies have approved the merger. A statement said WarnerMedia and Discovery Inc. would form one of the largest global streaming players.

This tie-up brings one of Hollywood’s biggest studios and Discovery’s channels under the same ownership.

Currently, the market is already packed with mega giants like Netflix, Disney+, HBO. But this deal will lead to the entry of another mega-giant. Thus, raising the competition level.

Moreover, the proposed merger would put together movie giant Warner Bros. Entertainment, which owns the Harry Potter and Batman franchises, with Discovery’s home, cooking, nature and science shows.

“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 AT&T chief executive John Stankey.

‘Streaming arms race’

With the help of super hit series like Game of Thrones and Succession, WarnerMedia owned HBO and HBO Max have gained around 64 million subscribers worldwide.

But it is currently overshadowed by larger rivals Netflix and Disney+, which has 208 million and 100 million subscribers respectively.

Discovery includes Animal Planet and Discovery Channel. It reaches more than 88 million US homes. Whereas, Discovery+ streaming services has just started in January and has 15 million subscribers.

Discovery’s president and chief executive David Zaslav will be leading the joint venture, according to AT&T.

Recently AT&T has added another $14bn to its debt pile to fund the purchase of wireless spectrum. And this deal is meant to reduce those debts.

The companies expect the deal will close somewhere in the middle of next year.

 

 

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