Today we have the official confirmation of the rumors about plans of AT&T and Discovery Inc. to consolidate their assets in the entertainment and media industries. The parties have already closed a $ 43 billion deal (AT&T will receive payment in both cash and debt securities), which is planned to close after regulatory approval in 2022.
Under the terms of the deal, Discovery and WarnerMedia, owned by AT&T, will form a new joint venture company. Upon completion of the merger, AT&T shareholders will receive 71% of the combined company. The current head of Discovery, David Zaslav, will receive the CEO of the new joint venture, and what position WM Jason Kilar takes is not specified.
What name the new joint venture Discovery and WarnerMedia will receive is still unclear. But it is known that, among other things, the following assets are part of the transaction:
- Film company Warner Bros. and its television divisions;
- DC Entertainment along with a film studio and publisher;
- Cable network HBO;
- Online cinema HBO Max;
- Discovery Channel;
- Discovery + streaming service;
- Channels CNN, TNT, and TBS.
How this deal will affect the internal structure and long-term development plans of WarnerMedia and Discovery is still unknown. But some parts of the WB Games game studios will definitely go to the new conglomerate. It has not yet been announced which teams will be transferred to Discovery. The Warner Bros. Eleven studios include NetherRealm, Rocksteady, Monolith, Avalanche Software, and TT Games – right now working on projects such as Gotham Knights, Suicide Squad: Kill the Justice League, and Hogwarts Legacy.
WB Games is getting broken up somehow due to AT & T’s WarnerMedia-Discovery sale / merger. “Some of the gaming arm will stay with AT&T and some will go with the new company,” rep tells Axios’ @sarafischer… No further info. WB Games lists 11 studios, games for all kinds of IP, devices
– Stephen Totilo (@stephentotilo) May 17, 2021
The deal aims to strengthen WarnerMedia and Discovery’s positions in the global entertainment market, especially in the rapidly growing online cinema market.
“This agreement brings two of the world’s leading entertainment companies together to complement each other and opens the door for the new company to become one of the world’s leading direct-to-consumer streaming platforms.
The deal will support HBO Max’s fantastic growth and international launch through Discovery’s global infrastructure, and the savings from efficiency gains can be re-invested in content production to give consumers exactly what they want. ”
John Stankey
CEO of AT&T
The combined company is expected to have $ 52 billion in 2023, with a positive synergy impact estimated at $ 3 billion. At the same time, AT&T will focus on 5G and fiber-optic broadband.
In December 2019, Viacom and CBS teamed up again to create a worthy competitor to Netflix, Amazon, HBO Max, and the Disney empire (Disney Plus and Hulu). Earlier this year, the newly formed ViacomCBS launched Paramount +, an online movie theater with over 30,000 episodes of TV shows and films from various brands, including BET, CBS, Comedy Central, MTV, Nickelodeon, and Paramount Pictures, as well as sports and news coverage.
Now the online cinema HBO Max operates only in the United States, but it is planned to launch in 39 more Latin American countries in June. By the end of 2021, the service is planned to be launched in Central Europe, Scandinavia, Spain, and Portugal.