Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

AT&T to spin off and combine WarnerMedia with Discovery in deal that would create streaming giant

AT&T to spin off and combine WarnerMedia with Discovery in deal that would create streaming giant

The streaming TV race is about to get even more competitive.

On Monday morning AT&T (T) and Discovery, Inc. (DISCA)announced a deal under which AT&T's WarnerMedia will be spun off and combined with Discovery in a new standalone media company.

The deal, subject to regulatory approval, will combine two treasure troves of content, including the HBO Max and discovery+ streaming services. CNN will be included in the transaction.

Discovery CEO David Zaslav will run the combined business, according to Monday's announcement. "I think we fit together like a glove," Zaslav said at a virtual press conference.

On one level, the tie-up is a logical way to better compete with Netflix and Disney, the two top streaming players. "Scale" is the word AT&T CEO John Stankey used repeatedly in interviews on Monday.

On another level, the transaction is also a complex way for AT&T to unwind its 2016 bid for Time Warner, which took effect in 2018, with the assets named WarnerMedia.

A spin-off will help AT&T prioritize its broadband business and pay down its huge debt load. "AT&T would receive $43 billion (subject to adjustment) in a combination of cash, debt securities, and WarnerMedia's retention of certain debt," Monday's announcement said. Zaslav said Monday the new media company will start with $55 billion in debt.

AT&T's shareholders will get the majority of the shares in the combined company, at 71%, while Discovery's shareholders will get 29%.
Shares of AT&T were up about 2% in morning trading. Shares of Discovery, which popped as much as 16% pre-market, were down about 2%.

Now this new company needs a name


The executives leading the transaction said they'll announce a name for the spun-off company later this week. They expect the deal to take effect in mid-2022.

Prominent Wall Street analysts said the deal made strategic sense. "In short order," Craig Moffett of MoffettNathanson wrote, "the new company will be able to join the upper tier" of global streaming service players.

In an interview with CNN's Poppy Harlow, Zaslav said that "'more' does make a difference," meaning more programming available in more ways.

"We think if you can take our content" at Discovery "together with the great content on HBO Max as well as the amazing production coming out of Warner Bros, that we'll have something that is truly unique," he said.

Added scale is also a factor in the cable television businesses that made both WarnerMedia and Discovery into media behemoths in the first place.

Cable remains hugely profitable, though the businesses are under pressure due to cord-cutting and streaming.

The Discovery-Warner portfolio will include six of the top-rated eight channels on cable in key advertiser demographics: CNN, TNT, TBS, ID, HGTV, and Food Network. This could give the company more leverage in negotiations with distributors and ad buyers.

AT&T slimming down


Bloomberg News broke the news of the impending deal on Sunday. Zaslav and Stankey indicated Monday that the pairing had been in the works for months.

In many quarters the news is being seen as AT&T admitting defeat after an ill-fated attempt to bring content and distribution together.

Earlier this year AT&T also struck a deal to carve out its satellite business DirecTV at a significant loss from the 2015 purchase price.

And another telecom giant, Verizon, threw in the towel on its content efforts as well, agreeing to sell Yahoo and AOL for $5 billion.

Of course, the media world looks very different today than it did just a few years ago.

"We are now in a world where relevance and future success will be tied to greater scale and growth globally," Stankey said in a memo to WarnerMedia staffers. "To be one of the best global media companies requires not only broad and deep creative assets, but an investor base and access to capital to make it happen. The decision to combine WarnerMedia with Discovery is rooted in this conclusion."

Discovery's nonfiction-focused streaming service launched in January, utilizing a library of shows from channels like TLC and Animal Planet. At the time, Zaslav told CNN that discovery+ was a "great complement to someone who has Disney (DIS) or Netflix (NFLX), or HBO, Disney and Netflix."

Zaslav also emphasized Discovery's global reach. HBO Max, currently available in the US, is about to make an international push. Stankey said the combination will support HBO Max's global growth "and create efficiencies which can be re-invested in producing more great content to give consumers what they want."

Zaslav said Discovery and Warner currently spend a total of $20 billion a year on content. 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. "Jason is a fantastic talent," Zaslav said.

Zaslav also affirmed the independence of CNN's newsroom. He said he commits to "the greatest editorial integrity" for CNN and intends to fund CNN's streaming service plans.

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

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×