The company wants to combine its media business, now called Warner Media, with that of Discovery, according to reports from Bloomberg and Reuters over the weekend.
The stories did not name sources, but followed a period of rumours that AT&T wants to unload its media acquisition and focus on being a telecoms company, faced with a struggle to invest in 5G mobile at the same time as T-Mobile US and Verizon.
However, first thing Monday morning US time the two groups confirmed the reports, saying that AT&T will hold a 71% stake in the combined operation for a payment of $43 billion from Discovery. Discovery shareholders will own the other 29%. Both boards have approved the transaction.
The news comes weeks after AT&T also sold a stake in DirecTV, its direct-to-home satellite business, to TPG Capital, a division of the US private equity group TPG, which is not connected with the Australian telco of the same name.
AT&T bought DirectTV for $49 billion in 2015 but TPG will pay just $7.6 billion in cash and take on $200 million of DirecTV debt for a 30% stake, with AT&T TV and U-verse thrown into the bargain.
Now the giant telco appears to be doing the same with Warner Media, which it bid for in 2016, fought for with the Trump administration through the courts and finally won in 2019.
Warner Media owns brands such as CNN and HBO, and Discovery owns Eurosport, Food Network and the Oprah Winfrey Channel. That combination would mean a merger proposal would have to be fought through regulators worldwide — but, as the Warner experience shows, AT&T is used to fighting things through regulators.
According to a calculation by the Financial Times, a combined company would be worth $150 billion. Bloomberg said a deal could be announced this week.
The move follows Verizon’s decision just two weeks ago that it will reverse its decision to acquire media brands AOL for $4.4 billion in 2015 and Yahoo for $4.5 billion in 2017: Apollo Global Management will buy 90% of Verizon Media for $5 billion, a substantial loss for the phone company.
Meanwhile in the UK, BT also indicated this month that it is looking to sell its BT Sport subsidiary, either in full or just a stake, after eight years of heavy investment.
