NEW YORK – AT&T would combine its massive media operations, including 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 as households abandon cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube.
In the all-stock deal, AT&T would receive $43 billion in a combination of cash, debt securities and WarnerMedia’s retention of certain debt. AT&T shareholders would receive stock representing 71% of the new company and Discovery stockholders would own 29% of the new company.
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AT&T 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. The Justice Department tried to block the deal, citing anti-competitive reasons.
The deal with Discovery is likely to close by the middle of next year.