AT&T was so hyped up when they bought WarnerMedia. They knew they were going to be ultra successful with all the content streaming on customers cellphones. It was going to be amazing. Fast forward 3 years and AT&T be like…
AT&T confirmed Monday that it will spin off its WarnerMedia division — home to all its Hollywood TV and film assets, including streaming service HBO Max — and merge it with Discovery, the cable-network giant that specializes in nonfiction programming and reality shows. The deal is a seismic jolt to the media industry, creating what both companies hope will become a global entertainment titan to challenge Disney and Netflix.
Streaming was central to AT&T’s and Discovery’s rationale for fusing their entertainment operations into one. But this deal also casts uncertainty about the future shape of both HBO Max and Discovery Plus, the two companies’ streaming services.
Per The Verge:
The deal will bring a lot of familiar names in the TV and film world under one roof. WarnerMedia owns HBO, CNN, Cartoon Network, TBS, TNT, and the Warner Bros. movie studio, which is responsible for such huge franchises as Harry Potter and Batman. Discovery operates numerous cable networks, including HGTV, Animal Planet, Food Network, and TLC. Both companies also have their own streaming platforms: HBO Max and Discovery Plus.
The boards of both AT&T and Discovery have approved the deal, but it will still have to be signed off by regulators. The deal is an all-stock transaction, which will see AT&T receive $43 billion in a combination of cash, debt securities, and debt retention on the part of WarnerMedia. AT&T shareholders will receive stock worth 71 percent of the new company, while Discovery’s shareholders will own the remaining 29 percent.
The new company, which has yet to be named, will be led by Discovery chief executive David Zaslav. “It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity,” said Zaslav in a press release. “With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins.”
The move is a significant U-turn for AT&T, which first struck a deal to acquire WarnerMedia (then known as TimeWarner) in October 2016 for $85.4 billion. The acquisition was opposed by the Justice Department, which said it would lead to higher prices for consumers (though some suggested that President Trump’s dislike of Warner property CNN was also a factor). But after years of wrangling in court, the deal was finally approved in 2018. Now, just three years later, it’s being undone.
The new combination of Warner Media and Discovery will become the world’s second largest media firm by revenue after Disney, with an enterprise value of $132 billion, reports the Financial Times.
The question now is what does this mean for our favorite WB movie franchises and TV shows? Only time will tell.