AT&T Inc. (NYSE: T) and Discovery, Inc. (NASDAQ: DISCA) has reported a definitive agreement to join WarnerMedia’s entertainment, sports and news assets with Discovery’s international entertainment and sports business to create a global entertainment company. The agreement is structured as an all-stock Reverse Morris Trust transaction. Subject to adjustment, AT&T will receive USD 43 Billion in a mixture of cash, deb securities and WarnerMedia’s retention of certain debt as AT&T’s shareholders will receive stock representing 71% of the new company. Discovery shareholders will retain 29% of the new company as directors of both boards have approved the transaction.
Ceo David Zaslav Said: “During my many conversations with John, we always come back to the same simple and powerful strategic principle: these assets are better and more valuable together. It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity. With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins…consumers with more diverse choices, talent and storytellers with more resources and compelling pathways to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet that is better positioned to compete with the world’s largest streamers. We will build a new chapter together with the creative and talented WarnerMedia team and these incredible assets built on a nearly 100-year legacy of the most wonderful storytelling in the world. That will be our singular mission: to focus on telling the most amazing stories and have a ton of fun doing it.”
Ceo John Stankey Said: “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. 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. For AT&T shareholders, this is an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity. AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend. Plus, they will get a stake in the new company, a global media leader that can build one of the top streaming platforms in the world.”