AT&T, the owner of HBO and Warner Bros. studios, and Discovery , home to lifestyle TV networks such as HGTV and TLC, said on Monday (May 17) they will combine their content assets to create a standalone global entertainment and media business.
Discovery President and Chief Executive David Zaslav will lead the proposed new company, which brings together one of Hollywood’s most powerful studios, including the Harry Potter and Batman franchises, and Discovery’s stable of unscripted home, cooking and nature and science shows.
The new company, whose name will be disclosed by next week, will be 71% owned by AT&T’s shareholders and 29% by Discovery’s.
Other details, including the future of WarnerMedia CEO Jason Kilar in the new company and how the combined properties and services will be arrange have yet to be worked out, executives said on a call with reporters after the deal was announced.
The move marks the unwinding of AT&T’s $108.7 billion acquisition of U.S. media conglomerate Time Warner in 2018, and underscores its recognition that TV viewership has moved to streaming, where scale is required to take on the likes of Netflix Inc and Walt Disney Co .
AT&T said it will pocket $43 billion in the tax-free spin off of its media assets, partly in cash and partly as a reduction of its $160.7 billion debt pile.
With Time Warner, AT&T sought to create a media and telecoms powerhouse, combining content and distribution.
Yet this proved a costly strategy as it simultaneously sought to expand next generation wireless services, most recently borrowing $14 billion to buy more wireless spectrum.
The deal is anticipated to close in mid-2022, pending approval by Discovery shareholders and regulatory approvals.
The new company is expected to see $3 billion in cost synergies and has no plans to sell any assets, including CNN.