Home Posts AT&T Agrees To Merge Media Operations With Discovery, Including CNN
AT&T Agrees To Merge Media Operations With Discovery, Including CNN

AT&T Agrees To Merge Media Operations With Discovery, Including CNN

NEW YORK (AP) — AT&T will combine its massive media operations, which include CNN, HBO, TNT, and TBS, in a $43 billion deal with Discovery, which owns lifestyle networks such as the Food Network and HGTV.

It marks a significant shift for AT&T, which faced the Justice Department in an antitrust battle less than three years ago when it sought to acquire Time Warner Inc. for more than $80 billion, a battle it won.

It is unclear what the new company will mean for customers, but it will almost certainly allow the bundling of streaming services, as Disney does with Disney+, Hulu, and ESPN.

CNN may also launch a standalone streaming service.

AT&T operates HBO Max, and Discovery launched its own streaming service, Discovery+. HBO Max and HBO have a combined U.S. subscriber base of about 44 million, while Discovery+ has about 15 million.

According to Craig Moffett of MoffettNathanson, “the new company will be able to join the upper tier of global (streaming) players: Netflix, Disney, and Amazon.”

Netflix, on the other hand, has over 200 million subscribers worldwide, while Disney+ has over 100 million.

AT&T will receive $43 billion in cash, debt securities, and WarnerMedia's retention of certain debt as part of the all-stock transaction, with AT&T shareholders receiving 71% of the new company's stock and Discovery stockholders receiving 29% of the new company's stock.

The new company will compete directly with Netflix, Amazon, Apple, Disney, and Comcast, all of which are building an arsenal of original media content.

According to the companies, the merger announced on Monday will allow them to invest more in original streaming content, as it will house nearly 200,000 hours of programming and bring together more than 100 brands under one global portfolio, including DC Comics, Cartoon Network, Eurosport, Magnolia, TLC, and Animal Planet.

The new company will be led by Discovery CEO David Zaslav, and its board of directors will consist of 13 members, seven of whom will be appointed by AT&T, including the chairperson, and six of whom will be appointed by Discovery, including Zaslav.

The transaction is expected to close in the middle of next year, subject to Discovery shareholders' approval; AT&T stockholders will not be required to vote on the transaction.

This article was contributed to by AP Business writers Anne D'nnocenzio and Michelle Chapman.

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