By
Steve Muchoki
December 14th, 2023
AT&T and Discovery are in talks to merge their business operations into one publicly traded entity.
Discovery Inc (NASDAQ: DISCA) stock jumped nearly 17% in Monday pre-market to trade around $41.69. AT&T Inc (NYSE: T) stock was up over 3.60% and trading around $33.40 during Monday’s premarket session. The spike in both stocks was attributed to news that AT&T is in advanced talks to merge its WarnerMedia with Discovery.
Bloomberg first reported that AT&T and Discovery are in talks to merge their business operations into one publicly traded entity. WarnerMedia as a mass media and entertainment conglomerate has assets including Turner Broadcasting, HBO, Cinemax, and Warner Bros.
Reportedly, the deal is expected to take head-on-head media giants Netflix Inc (NASDAQ: NFLX) and The Walt Disney Co (NYSE: DIS) that have dominated the online shows streaming market, especially during the Covid pandemic.
According to CNBC, a deal is expected to be announced on Monday, according to people familiar with the matter. However, since there was no official communication from either of the company’s representatives, CNBC noted that the deal could fall apart.
AT&T and Discovery Merger
Should the deal be finalized, then the expected structure will give AT&T shareholders a larger voting power than Discovery shareholders. Discovery CEO David Zaslav is expected to continue holding his position and also take over HBO, HBO Max among other global streaming services. According to Variety.com, Zaslav is a close associate to Liberty Media mogul Malone who controls 30% of the Discovery voting shares.
Notably, Zaslav is a business acumen with a successful track record, particularly in the content industry. Having worked at Discovery for 15 years, he has seen it through tough times including the 2008 economic crisis. Moreover, the company’s market capitalization has more than tripled since Zaslav took control of the topmost helm.
The merger is expected to pull resources and also brainstorm the skills to leverage each other’s strengths. Consequently, their stock market is expected to thrive in the coming months should the merger win the global market over their competitors.
On one hand, Discovery stocks are up approximately 67% in the past twelve months and are now up around 18.48% year-to-date. However, they are down approximately 1.98%, and 4.33% in the past one month and five days respectively according to MarketWatch. A survey conducted by MarketWatch indicates Discover stocks received an average of a Hold rating from 27 ratings.
On the other hand, AT&T stock has added approximately 9.47% in the past twelve months according to MarketWatch. Additionally, AT&T stock has jumped over 12%, 11%, and 7% in the past five months, three months, and one month respectively through Friday.
