On Monday, AT&T, one of the biggest telecom companies in the world announced that it would be combining its content unit with Discovery, another huge content house. The new company formed by the merger would become a formidable contender to current Hollywood media giants Netflix and Disney+. The telecom giant would merger its Warner-Media division with Discovery. The Financial Times reported that the new company could have a value of up to $150 billion.
AT&T is set to receive $43 billion as cash, debt, and Warner-Media’s retention of specific debt. Its shareholders would get 71 percent of the new company’s stocks while Discovery shareholders would get the remaining 29 percent stock.
The deal must be approved by regulators. It is expected to close midway through next year. Discovery shares rose to 9 percent on Monday morning but fell by 5 percent by the end of the day while AT&T shares fell by two percent.
If and when the deal goes through the new standalone company will be a mega one with these combined channels:
- CNN
- HBO
- Warner Bros
- Animal Planet
- TLC
- Discovery Channel
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David Zaslav will be the CEO of the new company. He is the currently the President and CEO of Discovery. There is no clarity on the future role of Jason Kilar, current head of Warner Media.
AT&T CEO John Stankey and Zaslav said that the combined spending of the two companies on content is $20 billion a year. This is higher than Netflix whose current spending is $17 billion. However, Netflix has a subscriber base of 208 million around the world while Disney+ has more than a million global subscribers in the short period of a year and a half since its launch.
HBO and HBO Max reported that they have about 64 million global subscribers while Discovery said that its worldwide paid subscribers are currently 15 million. Zaslav is looking to increase the new company’s subscribers to 400 million from the current 100 million subscribers that the separate company currently have worldwide as per his interview on CNBC’s “Squawk on the Street,” on Monday.
