Breaking Stories

AT&T to merge with Discovery as content consolidation continues for broadcasters

AT&T Inc (NYSE:T) has agreed terms of a combination with Discovery Inc (NASDAQ:DISCA) setting up yet more consolidation in the media sector as content IP owners seek shelter against ‘cord-cutting’.

“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” said AT&T chief executive John Stankey.

“It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want.”

Under the terms of the deal, AT&T will receive $43bn and its shareholders will own 71% of the new company, while Discovery shareholders will hold 29%.

Commentators marked the deal as another ramp-up in competition in the global streaming market.

The telecoms giant’s WarnerMedia unit could pull Discovery into a new entity and house together all of AT&T’s media companies –  HBO and Warner Bros along with multiple other media brands including CNN, the TNT and TBS networks, subsequently Discovery, and HGTV.

It would mark AT&T’s latest reshuffle of the telecoms firm’s media business, after its 2018 deal to buy TimeWarner for US$81bn.

Indeed, some Wall Street commentators have already called the new plan a ‘U-turn’ in what was previously a hard-fought and costly media strategy.

Perhaps notable is that such a plan creates a distinct separation between telecoms and tv amidst the growing ‘cord-cutting’ trend which has been driven by the rise of streaming platforms like Netflx and Amazon Prime.

It sees customers increasingly avail of television content via streaming, unattached from their cable and telecoms packages.

Disney cut a distinct new model with Disney+ and similarly, it has been followed by Warner via HBO Max. As content IP owners they have taken control of distribution through streaming, in a ‘direct-to-consumer’ approach, rather than merely licensing content to Netflix or Amazon.

Also, amidst the pandemic, this also opened up the D2C market for Disney and Warner’s respective movie studios which for certain new feature films have either skipped cinema release or have in parallel release to both theatres and their proprietary streaming platforms.

Early pre-market indications point to AT&T stock rising more than 1.5% on Monday, to around US$32.77, whilst Discovery stock is called some 11.7% higher at US$40 per share.


— adds confirmation of deal and terms–

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published.