T and DISCA Stock Down, AT&T Agrees to Merge Its WarnerMedia Unit with Discovery in $43B Deal

UTC by Steve Muchoki · 3 min read
T and DISCA Stock Down, AT&T Agrees to Merge Its WarnerMedia Unit with Discovery in $43B Deal
Photo: Depositphotos

AT&T and Discovery have taken a decision to merge their content business units to create a publicly-traded company.

Over the weekend, news came that AT&T Inc (NYSE: T) plans to merge its WarnerMedia business unit with Discovery Inc Series A (NASDAQ: DISCA) at the beginning of the week. The deal has been officially announced with AT&T expected to be compensated $43 billion in cash, debt, and WarnerMedia’s retention of certain debt according to CNBC.

Should the respective regulator authorize the deal, AT&T shareholders are expected to control approximately 71% of the newly announced publicly traded entity. Consequently, Discovery shareholders will have the rest, 29% of the newly merged company.

Both companies’ stock markets dropped during the extended trading hours on Monday. According to market analytics provided by MarketWatch, T stock was down approximately 3.79% during the pre-market session to trade around $30.18. On the other hand, DISCA stock had dropped approximately 0.59% to trade around $33.65.

AT&T and Discovery Merger

As Coinspeaker previously reported, Discovery CEO David Zaslav is expected to continue holding his position at the newly formed publicly-traded company. Reportedly, AT&T will appoint up to seven board members while Discovery appoints six inclusive of Zaslav.

“It is super exciting to combine such historic brands, world-class journalism, and iconic franchises under one roof and unlock so much value and opportunity,” Zaslav said, adding that AT&T and Discovery’s assets “are better and more valuable together.” Additionally, he noted that the new company will “focus on telling the most amazing stories and have a ton of fun doing it.”

The merger is expected to take media streaming giants Netflix Inc (NASDAQ: NFLX) and The Walt Disney Co (NYSE: CO) head to head in the content creation and sharing industry. At the time of reporting, WarnerMedia CEO Jason Kilar’s position in the newly merged company has not yet been defined. CNBC noted that it will be up to Zaslav to decide on his employment status.

The content creation and entertainment industry have experienced a dramatic change during the coronavirus pandemic. More people stayed at their homes the better part of last year to help control the spread of the virus. As a result, the demand in the entertainment industry especially the TV show streaming industry rose sharply. The competition rose hand in hand as the demand for quality products and services increased.

In a bid to maximize the demand, some companies including Netflix changed their payment rates. However, AT&T and Discovery have opted to merge their content business units to a publicly-traded company. As a result, both entities can bring together experienced skills to further push for the penetration of the global market.

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