AT&T to exit media in $43 bln deal with Discovery

The streaming video industry got even more cutthroat, Monday… when U.S. telecoms giant AT&T - owner of HBO and Warner Bros studios - announced it would spin off its massive media empire to combine with the Discovery network, creating a standalone global streaming giant.

Discovery President and CEO David Zaslav will lead the proposed new company, which will merge the likes of HBO, CNN and Warner Bros. Studios - including the Harry Potter and Batman franchises - with Discovery's trove of unscripted shows.

The name of this new company will be disclosed by next week. It will be 71% owned by AT&T's shareholders and 29% by Discovery’s.

The deal marks the unwinding of AT&T’s $108.7 billion acquisition of U.S. media conglomerate Time Warner in 2018, where AT&T sought to create a media and telecoms powerhouse… and underscores At&t’s recognition that TV viewership has moved to streaming, where scale is required to take on the likes of Netflix and Walt Disney.

It was a costly strategy for AT&T, which - at the same time - sought to expand next generation wireless services.

Now AT&T says it will use the $43 billion proceeds from the tax-free spin-off of its media assets to pay down its more than $160 billion of debt.

The deal is anticipated to close in mid-2022.