AT&T will combine its mass media operations including CNN HBO, TNT and TBS in a $ 43 billion deal with Discovery, the owner of lifestyle networks such as Food Network and HGTV, the companies reported Monday.
Facing competition from internet video services, major broadcasters have pulled out and sought strength through mergers.
The deal announced Monday will create a new media company to compete against streaming services like Netflix, Amazon Prime Video, Facebook, TikTok and YouTube.
Under the agreement, AT&T will receive $ 43 billion in cash, debt securities and WarnerMedia’s retention of certain debt. AT&T shareholders will own 71% of the new company and Discovery shareholders 29%.
AT&T ENTERS THE STREAMING BUSINESS THROUGH HBO MAX
AT&T entered the streaming business through HBO Max, a direct competitor to Netflix, Apple, Disney, and Comcast. Discovery launched discovery + this year.
The new company will be able to invest more in original streaming content.
It will host nearly 200,000 hours of programming and bring together more than 100 brands in a global portfolio that includes DC Comics, Cartoon Network, Eurosport, Magnolia, TLC and Animal Planet.
The deal to quit its media business marks a major shift for AT&T, which struggled hard to drive a transaction in 2018 to buy Time Warner for $ 85.4 billion but the Justice Department blocked the deal on competitive grounds.
Discovery President and CEO David Zaslav will lead the new company.
The change is due to the COVID-19 pandemic.
The deal is expected to close in the middle of next year. It still needs approval from Discovery shareholders. AT&T shareholders do not need to vote on the transaction.
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.