AT&T signs deal to combine media empire with Discovery

AT&T will combine its massive media operations that include CNN, HBO, TNT and TBS in a 43 billion dollar deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.

Faced with strong competition from streaming services, major broadcast media companies have sought strength through mergers.

The deal would create a separate media company with households increasingly abandoning cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube.

Netflix
Streaming services like Netflix are fierce competition for traditional media companies (Netflix)

In the all-stock deal, AT&T will receive 43 billion dollars in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt. AT&T shareholders will receive stock representing 71% of the new company and Discovery stockholders will own 29% of the new company.

AT&T had pushed into the streaming sector through HBO Max, a direct competitor with Netflix, Apple, Disney and Comcast. Discovery launched a standalone streaming service called Discovery Plus this year.

The deal to give up its media business marks a major shift by AT&T, which fought hard to push a transaction through in 2018 to buy Time Warner for 85.4 billion dollars with the Justice Department trying to block the deal on anti-competitive reasons.

The deal is expected to close by the middle of next year.