Mega-media deal

Dallas-based AT&T discovers partner for $43 billion spinoff of WarnerMedia

Dallas' AT&T discovers partner for $43 billion spinoff of WarnerMedia

AT&T downtown
There's a new media powerhouse in town. Photo courtesy of AT&T

In a $43 billion deal, Dallas-based AT&T is spinning off WarnerMedia — home of iconic brands like CNN, HBO, and Warner Bros. — and merging it with Discovery to create a multimedia powerhouse.

AT&T and New York City-based Discovery announced the deal May 17.

Aside from CNN, HBO, and Warner Bros., brands like DC Comics, Cartoon Network, HGTV, Food Network, TNT, TBS, Magnolia, TLC, Animal Planet, and Oprah Winfrey’s OWN would be members of a single corporate family. The new entity would operate as a standalone company, separate from AT&T and Discovery.

Discovery President and CEO David Zaslav has been tapped to lead the new company. He says the WarnerMedia and Discovery assets “are better and more valuable together.”

If regulators bless the deal, which is set to be completed in mid-2022, AT&T shareholders would own 71 percent of the new company and Discovery shareholders would own 29 percent. Revenue for the new publicly traded combo is projected to reach $52 billion in 2023.

“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,” AT&T CEO John Stankey, former CEO of WarnerMedia, says in a release.

Stankey adds that the spinoff of New York City-based WarnerMedia will enable AT&T to focus on investments in 5G and fiber broadband services. The Wall Street Journal notes that the deal will unwind “the telecom company’s big bet on entertainment after less than three years.” AT&T purchased Time Warner, later renamed WarnerMedia, for $85 billion in 2018.

According to The New York Times, the new company would be bigger than Netflix or NBCUniversal. Together, WarnerMedia and Discovery generated more than $41 billion in revenue last year, behind only Walt Disney among U.S. media companies.