AT&T and rival Discovery to create global streaming giant

AT & T has agreed to spin off WarnerMedia in a multi-billion dollar deal and combine it with rival Discovery to create a programming-intensive media empire to compete with Disney and Netflix globally. Streaming race..

The deal, just three years after AT & T paid $ 85.4 billion to CNN, HBO, and Warner Bros. owners, reflects the rapid growth of the traditional US media group. Trying to reinvent myself As a streaming service.

Under the proposed partnership, one of Hollywood’s most valuable portfolios, including Warner Bros. Pictures and TV studios, HBO networks, and a portfolio of cable channels including CNN, will integrate with the “real” output of the brand’s Discovery. Will be done. It ranges from sports and wildlife to home renovations.

Discovery’s longtime CEO, David Zaslav, will lead an integrated group in which AT & T owns 71%. Jason Killer, an executive brought in last year to accelerate the transition of WarnerMedia to streaming with HBO Max, was not mentioned in the merger application.

The deal represents a humble setback for AT & T, which has bet and rushed up one of America’s largest debt piles to become the world’s largest vertically integrated content and distribution company. “This should put an end to the debate over the synergies between content and distribution,” said Jonathan Chaplin, an analyst at New Street Research who called the deal a “total surrender.”

The spin-off is the latest in a series of ruthless deals by John Stanky, who took over CEO last year to unleash his predecessor’s expansionist legacy and refocus the company on its core business.

This included selling a 30% stake in DirecTV to private equity group TPG this year. The deal valued the sick television business at $ 16.25 billion. That’s about one-third of what Stanky’s predecessor paid six years ago.

The driving force behind this deal is the accelerating competition between the world’s largest tech and media companies to catch up with Netflix and own part of the future of entertainment. In the last 18 months alone, Disney, Apple, WarnerMedia, Comcast, Discovery and others have launched streaming platforms with global ambitions.

Citi analyst Jason Bazinette said before the deal was announced, he imagined Discovery’s “several other potential suitors would join the fight” and made a competing merger with WarnerMedia. He said he could make suggestions. “We’re not going to rule out the involvement of Comcast, Disney and ViacomCBS,” he writes.

AT & T and Discovery have agreed to pay $ 720 million or $ 1.8 billion, respectively, if the transaction fails, including a significant cancellation fee.

Discovery and WarnerMedia generated a total of $ 41 billion in revenue in 2020. This is compared to the $ 65 billion in revenue of Disney, the world’s largest media group.

AT&T and rival Discovery to create global streaming giant Source link AT&T and rival Discovery to create global streaming giant

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