AT&T signs deal to combine media biz with Discovery

U.S. telecom giant AT&T Inc. has signed a deal to combine its media business, including CNN, with Discovery Inc., the owner of such lifestyle networks as the Food Network and HGTV

AT&T-Discovery-Merger (Copyright 2021 The Associated Press. All rights reserved.)

AT&T will combine its massive media operations that include CNN HBO TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.

Faced with cord-cutting and incursions by streaming services, major broadcast media companies have retrenched and sought strength through mergers.

The deal announced Monday would create a separate media company with households increasingly abandoning cable and satellite TV, looking instead at Netflix Amazon Prime Video, Facebook TikTok and YouTube.

In the all-stock deal, AT&T will receive $43 billion in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt. AT&T shareholders will receive stock representing 71% of the new company and Discovery stockholders will own 29% of the new company. The transaction is considered a

AT&T had pushed into the streaming sector through HBO Max, a direct competitor with Netflix, Apple, Disney and Comcast. Discovery launched a standalone streaming service called Discovery Plus this year.

The deal to give up its media business marks a major shift by AT&T, which fought hard to push a transaction through in 2018 to buy Time Warner for $85.4 billion with the Justice Department trying to block the deal on anti-competitive reasons.

The deal is expected to close by the middle of next year.