AT&T announced this morning that it is spinning off WarnerMedia so that it can combine with Discovery to create a new standalone media company. AT&T will receive $43 billion for the sale of WarnerMedia, and AT&T shareholders will get a 71 percent stake in the new company.
“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 said. “It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want.”
WarnerMedia owns assets such as HBO, Cinemax, Turner Broadcasting, and the Warner Bros. film, animation, television studios, among other media properties. And Discovery owns popular cable channels such as Discovery Channel, Animal Planet, Science Channel, and TLC. With projected combined revenues of $52 billion by 2023, the new firm will be a powerful new competitor in the streaming media space.
“The new company will be able to invest in more original content for its streaming services, enhance the programming options across its global linear pay-TV and broadcast channels, and offer more innovative video experiences and consumer choices,” AT&T explains in the announcement press release. “The ‘pure play’ content company will own one of the deepest libraries in the world with nearly 200,000 hours of iconic programming and will bring together over 100 of the most cherished, popular and trusted brands in the world under one global portfolio.”
AT&T notes, too, that the Boards of Directors of both firms have approved the transaction, which is expected to close in 2022. The only thing that’s unclear is the branding that the new company will use.