On Monday, AT&T and Discovery announced a definitive agreement to combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s leading nonfiction, international entertainment and sports businesses to create a leading, standalone global entertainment company led by Discovery CEO David Zaslav.
Under the terms of the agreement, which is structured as an all-stock transaction, AT&T would receive $43 billion in cash, notes and the assumption of certain debt by WarnerMedia. AT&T shareholders would receive stock representing 71 percent of the new company. Discovery shareholders would own 29 percent of the new company.
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The name of the new company has not yet been decided, nor has the management structure. “Jason Kilar will remain CEO of WarnerMedia for the time being,” said John Stankey of AT&T at a press conference early Monday. “David has to decide what he wants to do and who will take on which role in the future.”
The boards of directors of AT&T and Discovery have approved the transaction.
The partners said today that the new company will compete globally in the fast-growing direct-to-consumer business and offer compelling content to DTC subscribers across its portfolio, including HBO Max and the recently launched discovery+. It will combine WarnerMedia’s renowned content library of popular and valuable IP with Discovery’s global footprint, local language content trove and deep regional expertise in more than 200 countries and territories. The new company will be able to invest in more original content for its streaming services, enhance programming options across its global linear pay-TV and broadcast channels, and deliver more innovative video experiences and consumer choice.
The transaction is expected to close in mid-2022, subject to Discovery shareholder approval and customary closing conditions, including receipt of regulatory approvals. No vote of AT&T shareholders is required. Agreements are in place with John Malone of Liberty Media and Advance to vote in favor of the transaction.
The board of directors of the new company will consist of 13 members. Seven of them, including the CEO, will initially be appointed by AT&T; Discovery will initially appoint six members, including Zaslav.
“This agreement brings together two leading entertainment companies with complementary content strengths and positions the new company as one of the leading global direct-to-consumer streaming platforms,” said John Staneky, CEO of AT&T. “It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies that can be invested in producing more great content to give consumers what they want.”
“In my many conversations with John, we always come back to the same simple and powerful strategic principle: these assets are better and more valuable together. It’s super exciting to bring such historic brands, world-class journalism and iconic franchises under one roof and unlock so much value and opportunity,” said Zaslav.
“With a library of valuable intellectual property, explosive management teams and global expertise in every market in the world, we believe everyone wins: consumers with more choice, talent and storytellers with more resources and compelling paths to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet and better positioned to compete with the world’s biggest streamers.”
More to come… A press conference is underway, followed by a separate conference call with investors.
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