Monday morning, AT & T and Discovery, Inc. Has announced a deal to spin off AT & T’s WarnerMedia and integrate it with Discovery at a new standalone media company.
The deal combines a treasure trove of two content, including HBO Max and discovery + streaming services, subject to regulatory approval. The CNN is included in the transaction.
Discovery CEO David Zaslav will run the merger, according to a statement on Monday. According to the press release, “executives of both companies” will be “key leadership roles.”
At one level, partnerships are a logical way to compete with two top streaming players, Netflix and Disney.
At another level, it’s also a complex way for AT & T to use an asset named WarnerMedia to cancel Time Warner’s 2016 bids that came into effect in 2018. The two companies said the deal is expected to come into effect in mid-2022.
AT & T shareholders will acquire a majority stake in the merged company, 71%, and Discovery shareholders will acquire a 29% stake.
Spin-offs help AT & T prioritize its wireless business and repay huge debt. The release states that “AT & T will receive $ 43 billion (adjusted) for a combination of cash, debt securities and certain debt reservations by WarnerMedia.”
AT & T’s share increased by more than 3% before launch, while Discovery’s share increased by 16%.
Well-known Wall Street analysts have predicted and in some cases encouraged this type of movement. Earlier this year, AT & T signed a deal to open up the satellite business DirecTV with a significant loss from the purchase price in 2015.
Another telecommunications giant, Verizon, has also agreed to throw a towel into its content efforts and sell Yahoo and AOL for $ 5 billion.
Of course, the world of media today is very different from just a few years ago. Investors are focusing on streaming year after year.
Bloomberg News broke news of an imminent deal on Sunday, saying Warner Plus Discovery “will be a formidable competitor to Netflix and Disney.”
A non-fiction-focused streaming service for Discovery was launched in January using the program library of channels such as TLC and Animal Planet. At the time, Zaslav told CNN that discovery + “complements anyone who has Disney or Netflix, or HBO, Disney, or Netflix.”
“I think people will have three or four,” said Christine Romans, CNN’s chief correspondent, when asked how many streaming services Americans would eventually use.
Zaslav also emphasized Discovery’s global reach. Currently available in the United States, HBO Max seeks to be an international impetus.
“The agreement connects two entertainment leaders with complementary content strengths and positions the new company as one of the world’s leading consumer streaming platforms,” AT & T CEO John Stanky said in a statement. I have. ” “Discovery’s global footprint supports HBO Max’s amazing growth and international launch, creating the efficiency to reinvest in creating better content to deliver what consumers want.”
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