NEW YORK (AP) – AT&T will combine its massive media activities, which include CNN HBO, TNT and TBS, in a $ 43 billion deal with Discovery, the owner of lifestyle networks like Food Network and HGTV.
With cable cutting and the penetration of streaming services, large media companies have pulled back and sought strength through mergers.
The deal announced on Monday would create a separate media company with households increasingly foregoing cable and satellite television. Broadcast media face significant threats from Netflix, Amazon Prime Video, Facebook, TikTok, and YouTube.
As part of the all-stock deal, AT&T will receive $ 43 billion in a combination of cash, debt and WarnerMedia’s retention of certain debts. AT&T shareholders will receive shares representing 71% of the new company and Discovery shareholders will own 29% of the new company.
AT&T had entered the streaming arena through HBO Max, a direct competitor to Netflix, Apple, Disney, and Comcast. Discovery launched a standalone streaming service called Discovery + earlier this year.
The new company will be able to invest more in original streaming content. It will encompass nearly 200,000 hours of programming and bring together more than 100 brands in a global portfolio including: DC Comics, Cartoon Network, Eurosport, Magnolia, TLC and Animal Planet.
The deal to close the media business marks a big change for AT&T, which struggled to push through a deal in 2018 to buy Time Warner for $ 85.4 billion. The Justice Department has tried to block the deal on anti-competitive grounds.
David Zaslav, President and CEO of Discovery, will lead the new company. The deal is expected to close in the middle of next year. It has yet to be approved by Discovery shareholders. AT&T shareholders do not need to vote on the transaction.