U.S. telecommunications giant American Telephone and Telegraph (AT&T) announced that it will spin off its Warner Media (WarnerMedia) and merge with the kingdom of documentary programming Discovery into a new independent company. The new company is expected to have a market value of US$150 billion (HK$1.17 trillion) with debt, and is expected to become a strong competitor to Netflix and the entertainment kingdom of Walt Disney.
Under the agreement, AT&T will receive a total of $43 billion in cash, debt and certain debt retained by WarnerMedia; AT&T shareholders will receive 71% of the new company and Discovery shareholders will receive 29%.
If approved by regulators, the transaction would represent a significant shift in AT&T’s multi-year strategy of acquiring media assets. Through WarnerMedia, AT&T owns TV channels such as HBO, CNN, TBS and TNT, as well as Hollywood’s heavyweight production studio, Warner Bros. Studios, which holds the rights to “Harry Potter” and “Batman,” etc. Discovery owns TV channels including HGTV, Food Network, TLC and Animal Planet.
With competition in the global streaming market heating up, AT&T’s media business is expected to have enough content to compete with its rivals after the merger with Discovery. In fact, both companies have recently entered the streaming market, with Warner Media’s HBO and HBO Max now having 63.9 million subscribers and Discovery’s Discovery+, with 15 million subscribers. By comparison, Disney’s Disney+ has more than 100 million subscribers and Netflix has more than 207 million subscribers.
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