AT&T to spin off WarnerMedia and combine it with Discovery in a $43B deal; the new company will be run by Discovery CEO David Zaslav
New York (CNN Business)The streaming TV race is about to get even more competitive. — On Monday morning AT&T (T) and Discovery, Inc. (DISCA) …
CNNBrian Stelter
Context & Ripple Effects
AT&T had first pursued vertical integration through its $85.4B Time Warner acquisition, which it completed in 2018. The WarnerMedia-Discovery transaction reverses that ownership structure while putting Discovery CEO David Zaslav in charge of the combined media operation.
The deal is the start of an integration path rather than an endpoint: Discovery later outlined an HBO Max and Discovery+ bundle leading to one service, tying the corporate combination directly to its consumer streaming strategy.
First-order effects
AT&T separates WarnerMedia from its telecom business, while Discovery becomes the operating partner in a combined media company led by David Zaslav.
WarnerMedia and Discovery gain a single management structure capable of coordinating their streaming services and content businesses.
Second-order effects
The planned HBO Max and Discovery+ bundle shifts the near-term integration task from ownership to product packaging, forcing the combined company to align two distinct subscription offerings.
AT&T's prior Time Warner investment is recast from a wholly owned media unit into a stake in a separate combined company, changing how it participates in the media business.
Third-order effects
The transaction points to streaming scale being pursued through corporate recombination and service consolidation, not only through internally built platforms.
David Zaslav officially will run the combined company. AT&T will nominate 7 members of the board including a chairperson TBD. Discovery will nominate 6, one of which will be Zaslav.
Verizon spins out Yahoo/AOL and now AT&T spins out WarnerMedia. These mergers never made sense since only synergy they brought was anti-competitive (i.e charging users less for HBO traffic vs Netflix) Highlights the importance of having an actual strategy https://www.cnn.com/...
“AT&T would receive $43 billion (subject to adjustment) in a combination of cash, debt securities, and WarnerMedia's retention of certain debt, and AT&T's shareholders would receive stock representing 71% of the new company.” AT&T paid $85 billion for Time Warner in 2018.
The new company will have live sports, news, lifestyle content. (CNN included in deal, Zaslav gave Zucker a shout-out as a friend) — Zaslav says he'll strive to drive the greatest creative culture in media today. Says he will have an office on the WB lot. https://www.axios.com/..…
No idea what this means in the long term, but I do feel comfortable saying the folks who think this is because of WB's handling of certain superhero properties should probably get out more. https://www.cnbc.com/...
Discovery CEO David Zaslav emphasizes his top priority is having good relationships with content producers. Is that throwing shade on Warner Media's decision to put 1st run movies on HBO Max? $T
If you follow the long story of media ownership over the past 40 years you see a constant churn of consolidation and spinning off, debt and more debt, with no discernible pattern and general failure all around. No model works better than any other. https://twitter.com/...
Verizon spins out AOL/Yahoo AT&T spins out WarnerMedia And so ends the legacy carriers trying to re-invent themselves as anything other than a ‘dumb pipe’ that they feared many years ago.
HBO Max is an established US domestic streaming leader says AT&T CEO John Stankey, but to keep pace and maintain a leadership position need global scale, access to capital and industry-best talent." Hence a deal with Discovery.
AT&T is spinning off WarnerMedia just a couple of weeks after Verizon offloaded AOL and Yahoo. US telcos reining their focus back in? https://www.nytimes.com/...
6/ If you read the articles today on the potential combination, everyone has a different take on AT&T's debt level. AT&T debt currently totals nearly $180 billion. https://www.google.com/... AT&T has been grappling with the enormous $170 billion-plus debt https://www.google.com/.…