AT&T, Discovery Form Global Streaming Giant

The proposed deal would put together one of Hollywood's most powerful studios, home to the Harry Potter and Batman franchises, with Discovery's stable of unscripted home, cooking and nature and science shows.

The deal also marks the unwinding of AT&T's US$108.7 billion acquisition of media conglomerate Time Warner in 2018, and underscores its recognition that TV viewership has moved to streaming, where scale is required to take on the likes of Netflix Inc and Walt Disney Co.

Discovery President and Chief Executive Officer David Zaslav will lead the new company.

Under the terms, AT&T would receive US$43 billion in a combination of cash, debt securities, and WarnerMedia's retention of certain debt. AT&T's shareholders would receive stock representing 71 percent of the new company, while Discovery shareholders would own 29 percent of the new company.

With the acquisition of Time Warner, AT&T sought to create a media and telecoms powerhouse, combining content and distribution.

Yet this proved a costly strategy as it simultaneously sought to expand next generation wireless services, most recently borrowing US$14 billion to buy more wireless spectrum.

The new company is projected to have 2023 revenue of about US$52 billion and adjusted EBITDA of about US$14 billion as well as US$3 billion in expected annual cost synergies.

The deal is anticipated to close in mid-2022, pending approval by Discovery shareholders and regulatory approvals. (Reuters)