US-based telecom giant AT&T on Monday announced a deal to combine its WarnerMedia unit with Discovery media, paving the way for the streaming studio to compete with Netflix and Disney+.
When the deal is finalised, AT&T will receive $43 billion -- in form of cash and WarnerMedia's retention of certain debt -- and its shareholders will take stock representing 71 per cent, while the Discovery shareholders get 29 per cent of the new company.
AT&T, under the agreement, will unwind its $85 billion acquisition of Time Warner and form a new media company with Discovery, The Financial Times reported.
AT&T owns CNN, HBO and Warner Bros after it acquisition of Time Warner, which was renamed to WarnerMedia. Discovery, which operates in around 220 countries, has channels like Animal Planet, TLC and the Discovery Channel.
Both companies, in a joint statement, described the merger as creating "one of the largest global streaming players." The deal is expected to close in the middle of 2022.
The deal will "combine WarnerMedia's premium entertainment, sports and news assets with Discovery's leading non-fiction and international entertainment and sports businesses to create a premier, standalone global entertainment company," the statement added.
AT&T stated that David Zaslav, President and CEO, Discovery, will lead the new company and the board would consist of 13 members, seven appointed by AT&T, and Discovery would appoint the rest, including Zaslav. The name of the new company will be announced in the coming days, AT&T added.