The AT&T-owned Warner Media (the former Time Warner) is to merge with Discovery. The new company will be a global company covering entertainment, news, non-fiction and sport. Interestingly, two-thirds of the Warner Media profit is generated by the former Turner networks CNN, TBS, and TNT.
Warner will receive $43bn in cash and 70% of the newco equity, while the business debt will remain with the newco. The spin-off will allow AT&T to focus on its core connectivity business focussing on broadband and 5G. AT&T acquired Warner Media in 2018 for $109bn but telcos have found the management of talent-based business to be challenging. The company already sold a 30% stake in its DirecTV subsidiary to TPG private equity in February for a fraction of its acquired value. AT&T’s shares lost almost 6% on the news, reflecting the risk of lower dividends after the divestment of its media interests.
This latest recognition of the challenges of combining telecomms with media came just as the UK-based Virgin Media (controlled, like Discovery, by John Malone) received regulatory clearance to acquire the 02 mobile phone network.
