AT&T announced on Monday morning that their WarnerMedia division will merge with Discovery in a new $43 billion deal. This new deal will combine HBO, CNN, Warner Bros, and Discovery’s many reality TV programs under one giant media conglomerate umbrella, much like Disney has done.
This latest merger will see AT&T receiving $43 billion in cash, as well as debt securities and WarnerMedia’s retention of debt. Also, this newest deal is the latest move in the so-called streaming wars. The companies involved with this merger state that this deal will help allow them to strengthen their overall global streaming businesses. It’s not yet clear if HBO Max and Discovery+ will fold, continue running, be combined as a bundle, or be combined into one massive streaming service in the future.
Back in 2016, AT&T acquired what was then known as TimeWarner for $85.4 billion, which also faced scrutinization from the Justice Department at the time. However, this latest deal shows AT&T’s latest way they will focus on streaming. As all signs point to streaming sticking around for a while, many media conglomerates have jumped into the race and formed their own streaming services. Paramount+, Disney+, and HBO Max are just the most recent examples of this.
AT&T’s $43 million merger combines many forces that could create a large streaming platform and media empire, similar to what Disney has done with their Disney+ streaming service and acquisition of Hulu. This WarnerMedia and Discovery merger will combine brands such as Discovery Channel, HBO, CNN, DC Comics, Food Network, HGTV, TNT, TBS, Animal Planet, TLC, and others. The companies involved have already stated that the combination of all of their content will equal about 200,000 hours of content.
This merger has also created a slight buzz among WarnerMedia employees. Since 2018, these employees have faced a round of mass layoffs and three huge restructurings. To them, this latest billion-dollar merger just signals another round of restructurings, which will likely also mean layoffs as the many brands and companies merge.
This new merger is interesting to some business watchers, as it appears to be a step back from what AT&T initially set out to do when they acquired TimeWarner in 2016. Back then, AT&T bought TimeWarner and sought to create a company that would be split into two — one side to focus on broadband, the other to focus on providing entertainment for those at home. However, AT&T struggled to do both successfully. This merger will help refocus their overall mission, as the company also announced on Monday that they would increase capital investments for 5G and fiber internet, as wireless is its main business.
Of this new company, AT&T shareholders will hold 71% while Discovery stockholders will own 29%. Discovery’s current CEO and president David Zaslav will oversee and lead the new conglomerate. The deal will be finalized sometime in the middle of next year, as it still needs approval from Discovery’s regulators and shareholders.
