AT&T announced a deal to combine its content unit WarnerMedia with Discovery in an effort to compete with other major streaming services on Monday (May 17).
CNBC reports AT&T will create a new business merging Time Warner -- which was acquired for $85 billion just under three years ago -- with Discovery, creating a new business separate from AT&T that could possibly be valued at as much as $150 billion, including debt, according to the Financial Times.
AT&T said it would receive an aggregate amount of $43 billion in a combination of cash, debt and WarnerMedia's retention of certain debt as part of the agreement announced on Monday.
AT&T shareholders will also receive stock representing 71% of the new company, while Discovery shareholders will be given 29%, as part of the agreement.
The companies involved said the deal, which still needs to be approved by regulators, is expected to close during the middle of 2022, CNBC reports.
The announced merger created a positive increase on the stock market for the companies involved with shares of Discovery nearly 9% higher on Monday and AT&T rising up more than 3%.
AT&T announced Discovery President and CEO David Zaslav will lead the new company, which has yet to be named, but is expected to have one announced in the coming days. The board will have 13 members, including seven initially appointed by AT&T including the chair, and six appointed by Discovery, including Zaslav.
“It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity,” Zaslav said, adding that both AT&T and Discovery's assets “are better and more valuable together.”
Zaslav said the merged company's singular mission is "to focus on telling the most amazing stories and have a ton of fun doing it."
AT&T's assets include CNN, HBO and Warner Bros. following its acquisition of Time Warner, which has since been renamed to WarnerMedia.
Discovery's assets include Animal Planet, TLC and the Discovery Channel.
Zaslav confirmed that the company is aiming to compete with top streaming services like Netflix and Disney+ and believes its offering of news, sports and entertainment will give it an advantage.
He also expressed confidence in CNN, which many have speculated would spin off from WarnerMedia and said the company intends "to take everything we have in news, combine it with CNN and be a world leader in news."
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