NEW YORK (AP) — AT&T will combine its massive media operations that include CNN HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.
Faced with cord-cutting and incursions by streaming services, major broadcast media companies have retrenched and sought strength through mergers.
The deal announced Monday would create a separate media company with households increasingly abandoning cable and satellite TV. Broadcast media is under significan threat from Netflix, Amazon Prime Video, Facebook, TikTok and YouTube.
In the all-stock deal, AT&T will receive $43 billion in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt. AT&T shareholders will receive stock representing 71% of the new company and Discovery stockholders will own 29% of the new company.
AT&T had pushed into the streaming sector through HBO Max, a direct competitor with Netflix, Apple, Disney and Comcast. Discovery launched a standalone streaming service called discovery+ this year.
The new company will be able to invest more in original streaming content. It will house almost 200,000 hours of programming and bring together more than 100 brands under one global portfolio, including: DC Comics, Cartoon Network, Eurosport, Magnolia, TLC and Animal Planet.
The deal to give up its media business marks a major shift by AT&T, which fought hard to push a transaction through in 2018 to buy Time Warner for $85.4 billion with the Justice Department trying to block the deal for anti-competitive reasons.
Discovery President and CEO David Zaslav will lead the new company. The deal is expected to close by the middle of next year. It still needs approval from Discovery shareholders. AT&T stockholders don’t need to vote on the transaction.