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. The deal reflects a new reality for the industry: Faced with cord-cutting and incursions by streaming services, major broadcast media companies have retrenched and sought strength through mergers, per the AP. The deal announced Monday would create a separate media company that would become what the Washington Post calls a "TV, film, and streaming behemoth." It would compete with the likes of Netflix and Disney, per CNBC. AT&T had previously pushed into the streaming sector through HBO Max. Discovery launched a standalone streaming service called Discovery Plus this year.
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 even as the Justice Department tried to block the deal for anti-competitive reasons. The Wall Street Journal calls it a "surprising U-turn" for the company. 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. The deal is expected to close by the middle of next year.
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