AT&T and Discovery have agreed to merge their media assets into a new business that has not been named yet. The new publicly traded company will include media brands such as CNN, HBO, and the Food network.
Both companies, AT&T and Discovery, saw an increase in shares on Monday. AT&T had a market value of $240 billion while Discovery’s market value traded above $17 billion. The new business represents a huge asset in the world of media. The newly appointed Chief Executive Officer of the merger, David Zatlav, said that the new business will spend $20 billion on content, a budget higher than that of Netflix.
The move shows AT&T’s intent to withdraw from the media business. Although shareholders of AT&T will hold 71% stake, the leadership of the new business was given to Discovery’s Chief Executive Officer, Zatlav.
The giant telecommunications company reported $169 billion in debt at the end of March. Therefore, it chose to focus on improving its wireless and broadband networks, which generate most of its profits.
References:
1) FitzGerald, D., Lombardo, C., & Flint, J. (2021, May 17). AT&T Agrees to Merge Its WarnerMedia Assets With Discovery. The Wall Street Journal. https://www.wsj.com/articles/at-t-to-combine-warnermedia-division-with-discovery-11621250928?mod=business_lead_pos1#.
2) Hammond, E., & Turner, N. (2021, May 17). AT&T Merges Media Assets With Discovery in $130 Billion Deal. Bloomberg.com. https://www.bloomberg.com/news/articles/2021-05-17/at-t-to-merge-media-assets-with-discovery-in-43-billion-deal.
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