The US giant AT&T and Discovery have announced a deal to merge WarnerMedia’s entertainment, sports and news assets with Discovery’s international entertainment and sports companies to create a unique, high-end global entertainment company.
In accordance with the agreement, AT&T will receive a total of $43 billion of cash, debt and the retention of certain debts of WarnerMedia. If approved by regulators, AT&T shareholders will receive 71% of the shares in the new company, while Discovery shareholders will own 29%.
It is expected that the deal will deliver significant value to both AT&T and Discovery shareholders. This merger will bring together the strongest teams of media business leaders and content creators, and include industry-leading libraries of films and series. The merger will create a new business that could be valued $150 billion, including debt.
This transaction gives AT&T and its shareholders the opportunity to leverage the value of their media assets and position their media business so that they are able to take advantage of popular DTC trends in the industry. Moreover, the deal gives companies the ability to make better use of the demand for connectivity.
Discovery President and CEO David Zaslav commented: “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. We will build a new chapter together with the creative and talented WarnerMedia team and these incredible assets built on a nearly 100-year legacy of the most wonderful storytelling in the world. That will be our singular mission: to focus on telling the most amazing stories and have a ton of fun doing it.”
The merger will take place via the Reverse Morris Trust, under which WarnerMedia will be split from the AT&T shareholders through a dividend or exchange offer, or a combination of both, in conjunction with Discovery. The arrangement is predicted to be tax-free for AT&T and AT&T shareholders.
