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AT&T and Discovery are combining forces to create a new media giant. The wireless carrier is spinning off WarnerMedia — the company it acquired in 2018 — and merging it with Discovery to make one standalone company that will be larger than Netflix or NBCUniversal, the New York Times reports.
The deal brings some of the most popular networks and shows together under one roof. WarnerMedia owns HBO, CNN, Cartoon Network, TBS, TNT, and Warner Bros. studios, while Discovery is home to HGTV, Animal Planet, Food Network, TLC and more. Both WarnerMedia and Discovery have their own relatively new streaming platforms; WarnerMedia launched HBO Max last May and Discovery rolled out Discovery+ at the start of this year.
The new company, which doesn’t yet have a name, will be led by David Zaslav, the current head of Discovery. “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,” Zaslav said in a press release sent out this morning. “With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins.”
AT&T and Discovery are anticipating their deal will be finalized next year after it’s been approved by approved by Discovery shareholders and regulators. Under the agreement, AT&T would receive $43 billion in a combination of “cash, debt securities, and WarnerMedia’s retention of certain debt,” per this morning’s announcement.
“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” said John Stankey, the chief executive of AT&T. The deal is a reversal for AT&T, who first acquired Time Warner for $85 billion three years ago. As the Times points out, the abrupt shedding of the company hints at “a failed acquisition strategy.”
Under the merger, executives from both WarnerMedia and Discovery will hold “key leadership roles,” although the management structure hasn’t yet been determined. For now, Jason Kilar remains CEO of WarnerMedia and is expected to remain with the company when the two businesses combine.
