Telecommunications titan AT&T’s WarnerMedia and Discovery unveiled their blockbuster $43-billion union Monday, a combination that would bring some of the biggest names in television — HBO, CNN, HGTV, Animal Planet and Food Network — and the Warner Bros. movie studio under one roof.
AT&T said it would exit the entertainment business by spinning off Warner Bros. and the TV channels that it acquired just three years ago. Those WarnerMedia assets will be combined with the Discovery channels, creating a new publicly traded company.
At launch, AT&T shareholders would own 71% and Discovery shareholders 29%. AT&T would receive $43 billion in cash, debt securities and other consideration so that it could pay down debt.
The proposed media marriage comes amid upheaval in the industry as traditional TV giants grapple with declining ratings, consumer cord-cutting and the rising threat posed by Netflix, Hulu, Disney+ and other streaming services.
The deal came together in the last three months after Discovery Chief Executive David Zaslav sent a Feb. 13 email message to AT&T Chief Executive John Stankey, grousing about lockdown restrictions that caused him to miss the AT&T Pebble Beach Pro-Am golf tournament.
The two men began talking about the future of media and eventually started meeting secretly at Zaslav’s Greenwich Village brownstone to hammer out deal terms. The boards of AT&T and Discovery approved the deal this weekend.
“It’s such a historic company and a great set of assets and it fits so well with what we’ve built over the last 15 years that I’ve been at Discovery,” Zaslav said Monday in an interview with The Times.
The name of the new entity will be announced next week.
Zaslav, 61, will run the combined company. The veteran executive has more than 30 years of experience in media, joining NBC in 1989 to build CNBC. He has been leading Discovery since 2007. A lawyer by training, he helped take the company public in 2008 and was an architect of its transformative $12-billion purchase of Food Network and HGTV in 2018.
By handing the reins to Zaslav, AT&T signaled its desire to make a clean break following a disastrous foray into entertainment. The Dallas telecommunication company’s two problem-plagued acquisitions — Time Warner and DirecTV — heaped $150 billion in debt onto its balance sheet. Three months ago, AT&T said it would unload El Segundo-based DirecTV into a new venture with TPG Capital. AT&T bought DirecTV for $49 billion in 2015 and will exit with $16 billion in cash.
The WarnerMedia-Discovery deal is expected to close in 2022, providing more uncertainty for a weary workforce.
WarnerMedia has cut 2,000 employees in the last year. By the time the deal is finalized, the remaining workers — including thousands in the Los Angeles area — will have experienced three different ownership regimes in less than five years. In the last three years alone, there have been three different CEOs of WarnerMedia.
Source: LA Times
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