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WarnerMedia is split from AT&T, combined with Discovery.

On monday morning AT&T (T) and Discovery, Inc. (DIAL)Announcing the deal that AT&T WarnerMedia will be split up and merged with Discovery in a new standalone media company.
The deal, subject to regulatory approval, will combine two portfolios of content, HBO Max and CNN’s Discovery + Streaming service, to be included in the transaction.

Discovery CEO David Zaslav will run a hybrid business as announced Monday.

“I think we fit like a glove,”

; Zaslav said at a virtual press conference.

To a certain extent, the tie was a sensible way to compete with Netflix and Disney, both of the top streaming players.

On another level, it’s a complicated way for AT&T to drop its 2016 bid for Time Warner, which took effect in 2018 with an asset called WarnerMedia.The companies said they expected the deal to take effect in the middle of the year. 2565

The split will help AT&T prioritize its broadband business and reduce a large amount of debt. “AT&T will receive $ 43 billion (possibly adjusted) through a combination of cash, debt and debt retention. Parts of WarnerMedia, ”said Monday’s announcement, Zaslav said on Monday the new company would start with $ 55 billion in debt.

AT&T shareholders will receive a majority stake in the combined company at 71 percent, while Discovery shareholders will receive 29 percent.

AT&T shares rose more than 3 percent just before the market, while Discovery’s shares rose 16 percent.

Famous Wall Street analysts had anticipated, and in some cases encouraged this kind of move. Earlier this year, AT&T struck a deal to retire its DirecTV satellite business, with significant losses on its 2015 purchase price.

And another telecom giant Verizon is also investing in its content efforts, agreeing to sell Yahoo and AOL for $ 5 billion.

Of course, the world of media today looks different from the past few years. Investors have become more focused on laser streaming with each passing year.

“We are now in a world where our relevance and future success will be linked to greater scale and growth around the world,” AT&T CEO John Stankey said in a note to WarnerMedia officials. The best of the world media is not only the best. But it only requires broad and in-depth creative assets. But there must still be an investor base and access to capital for it to happen, the decision to merge WarnerMedia with Discovery is rooted in this conclusion.

Bloomberg news agency reported Sunday’s impending deal, Zaslav and Stankey said Monday the match had been going on for months.
Discovery’s documentary-focused streaming service launched in January using a library of shows from channels like TLC and Animal Planet. At the time, Zaslav told CNN that Discovery + was “a great add-on for people with Disney. Or Netflix or HBO, Disney and Netflix. “

When Christine Romans, chief business correspondent at CNN, asked how many streaming services Americans will have, Zaslav said, “I think people will have three or four.”

Zaslav also highlighted the Discovery HBO Max’s global reach, now available in the United States, is going to be pushed internationally, Stankey said the combination will help support HBO Max’s global growth “and create a performance that It can be a repeat investment to produce more great content to give consumers what they want. “

Zaslav said Discovery and Warner spent $ 20 billion in total content annually.Netflix plans to spend at least $ 17 billion on content this year.

“Executives from both companies” will be in “key leadership roles” according to the press release. WarnerMedia CEO Jason Kilar was not mentioned in the announcement, but Zaslav signaled that Kilar may remain with the company. Great talent, ”said Saslav.

Zaslav also confirmed the independence of CNN’s newsroom, he said he was committed to. “Honest to the greatest editorial” for CNN and intend to fund CNN’s streaming service plans.

Zaslav, a longtime friend of CNN Worldwide chief Jeff Zucker, said at a press conference, “We love CNN … We think one of the real differentiators of the future is live news, live sports.”

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