AT&T Merges Media Assets With Discovery in Blockbuster Deal

AT&T has agreed to spin off its media operations in a deal with Discovery that will create a new entertainment company, merging assets ranging from CNN and HBO to HGTV and the Food Network. From a report: AT&T will receive $43 billion in cash, debt securities and debt retention, with AT&T shareholders getting stock representing 71% of the new company, the companies said in a statement Monday. The deal is structured as a tax-advantaged Reverse Morris Trust. Discovery Chief Executive Officer David Zaslav is to lead the new entity. WarnerMedia CEO Jason Kilar's future is to be determined, AT&T CEO John Stankey said on a conference call discussing the deal. The plan, first reported by Bloomberg News, would combine Discovery's reality-TV empire with AT&T's vast media holdings, creating a formidable competitor to Netflix and Walt Disney. It marks a retreat for AT&T's entertainment-industry ambitions after years of working to assemble telecom and media assets under one roof. AT&T, now the world's most heavily indebted nonfinancial company, gained some of the biggest brands in entertainment through its $85 billion acquisition of Time Warner, completed in 2018. Further reading: Jason Kilar, the WarnerMedia chief, is said to be negotiating his exit.

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