AT&T has agreed to spin off its WarnerMedia group and merge it with its rival programmer Discovery, joining two of the largest media businesses in the country, the companies announced Monday.
The deal, which could create a new massive media company valued at around $150 billion, will combine HBO, Warner Bros. studios, CNN and several other cable networks with Discovery’s numerous reality-based cable channels, including Oprah Winfrey’s OWN, HGTV, The Food Network and Animal Planet.
AT&T will receive $43 billion in a mix of cash, debt and WarnerMedia’s retention of certain debt for the deal, the companies said. While current AT&T shareholders will receive stock representing 71 percent of the new company, Discovery shareholders will control 29 percent, they said.
The move comes three years after AT&T acquired WarnerMedia, then known as Warner Bros, for $109 billion.
The joining of the two media companies could better position the newly formed company to compete with streaming giants like Netflix, Amazon Prime Video and Disney, which owns Hulu, Disney+ and ESPN+.
David Zaslav, the CEO of Discovery, will lead the merged company, according to the announcement.
“I’ll be in New York, I’ll be in LA, anywhere in the world where the creatives are to strive to drive the best creative culture immediately today, because that’s what’s going to make us the great company — and the great streaming company — that John and I started talking about a few months ago,” Zaslav 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,” John Stankey, CEO of AT&T, said in a statement. “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.”