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American broadcaster Discovery, one of the backers of Andrew Neil’s GB News network, is in talks to merge its media assets with those owned by AT&T.
The US telecoms giant took control of some of the world’s best-known film and television brands including HBO, CNN and Warner Bros with its $85bn (£60bn) acquisition of TimeWarner in 2018.
A combination with Discovery's reality TV empire could give the companies greater firepower to take on streaming giants such as Netflix, Bloomberg first reported.
Talks are ongoing but a deal could be announced as soon as this week. The value of the combined entity could be $150bn, with AT&T likely to control the lion's share of the business.
A decision to carve out part of its media business would be a change of direction for AT&T, which has spent years building up its entertainment arm alongside its telecoms and broadband operations.
The world’s largest telecoms company and former US state monopoly had revenues of $170bn last year.
Despite the quality of the assets it acquired with TimeWarner, AT&T has struggled to make the takeover work and wrote down $780m from its investment in Warner in January.
It also has a huge debt pile of nearly $150bn that it has been trying to reduce.
AT&T shares have risen around 10pc this year but are yet to return to pre-pandemic levels.
Discovery, meanwhile, is also pushing into streaming with its Discovery+ offering.
Backed by John Malone, the Virgin Media owner dubbed the “cable cowboy”, Discovery enjoyed a huge share price jump earlier this year, gaining as much as 140pc between January and March before halving.
The stock is up 16pc for the year to date, but investors have grown cautious over the short-term prospects of its streaming investments needed to challenge Netflix and Disney.
In March, Discovery said it had 13m paying subscribers to Discovery+, which launched earlier this year. Meanwhile, traditional pay TV revenues have fallen as more viewers opt for online services.
A Discovery spokesman said: “We never comment on rumours or speculation.”
AT&T did not respond to a request for comment.
AT&T’s moves to unwind parts of its sprawling media arm come as other broadband providers consider offloading their broadcasting assets to focus investment into their network infrastructure.
BT is in talks to sell a stake in BT Sport, The Telegraph revealed last month, as it moves to refocus spending on upgrading its fibre broadband network. Potential buyers could include Amazon, Disney, Dazn or ITV.
The cost of bidding for Premier League rights has proved too expensive amidst a need to upgrade its copper network to fibre and invest in faster 5G mobile technology.