AT&T, the US telecommunications giant, has announced the merger of its subsidiary WarnerMedia with the multimedia group Discovery. The news had been in the air since yesterday and was officially confirmed a few minutes ago.
The operation will lead to the birth of a new large media group that will challenge the major streaming platforms. According to a joint statement, AT&T will own 71% of the new group, while Discovery shareholders will own 29%.
To understand the scope of the wedding, just think that WarnerMedia owns cable channels such as Hbo, Cnn, Tnt and Tbs as well as Warner Bros studios. Discovery has a portfolio that includes its namesake network, HGTV, Food Network, TLC and Animal Planet. Last month the company made its debut in streaming industry, currently dominated by Netflix, Disney+ and Amazon Prime Video. Discovery has a market value of $16 billion and an enterprise value of $30 billion. AT&T and Discovery combined generated $2020 billion in 41 revenues, which compares with $65 million for the Disney group, the largest media company in the world.
“The idea is to combine Discovery's reality TV empire with AT&T's vast media holdings, building a business that would be a formidable competitor of Netflix Inc. and Walt Disney Co.”, anticipated Bloomberg, according to which the agreement marks an important change in AT&T's media strategy, after years of work to bring together telecommunications and multimedia resources under one roof and billions of investments (not too fruitful) in traditional TV. In fact, we recall that the acquisition by AT&T of Time Warner (later renamed WarnerMedia), costing 85 billion dollars, was completed only in 2018.
“The potential combination of AT&T's media assets with those of Discovery could provide Turner properties access to an international streaming platformwhile expanding the library of content available to HBO Max. Our calculations suggest that Turner's assets, which include CNN, TNT and TBS, could be worth between $40-45 billion in the event of a sale, which we consider a “interesting alternative given AT&T's need to finance its 5G and fiber construction and pay off debts,” Bloomberg analysts comment.
In Nasdaq pre-market, Discovery shares rose 12,43%, while AT&T shares rose 1,74%.
(Last update: 14.46 pm on 17 May).
