U.S. telecom giant AT&T announced Monday a deal combining its content unit WarnerMedia with Discovery, paving the way for one of Hollywood’s biggest studios to compete with rivals like media giants Netflix and Disney.
Under the agreement, AT&T said it would receive an aggregate amount of $43 billion in a combination of cash, debt and WarnerMedia’s retention of certain debt. AT&T shareholders would receive stock representing 71% of the new company, while Discovery shareholders would own 29%, it added.
If approved by regulators, the deal effectively reverses AT&T’s years-long plan to combine content and distribution in a vertically integrated company.
The deal would create a new business, separate from AT&T, that could be valued at as much as $150 billion, including debt, according to The Financial Times.
Shares of U.S. media company Discovery were 27% higher in premarket trading, while AT&T’s stock price was up more than 4%.
“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,” AT&T CEO John Stankey said in a statement.
“AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend. Plus, they will get a stake
