AT&T signs deal to combine media biz with Discovery

AT&T will combine its massive media operations that include CNN, HBO, TNT and TBS in a $43 billion US deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.

Faced with cord-cutting and incursions by streaming services, major broadcast media companies have retrenched and sought strength through mergers.

The deal announced Monday would create a separate media company as households increasingly abandoning cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube.

In the all-stock deal, AT&T will receive $43 billion US in a combination of cash, debt securities and WarnerMedia's retention of certain debt. AT&T shareholders will receive stock representing 71 per cent of the new company and Discovery stockholders will own 29 per cent of the new company. 

AT&T had pushed into the streaming sector through HBO Max, a direct competitor with Netflix, Apple, Disney and Comcast. Discovery launched a standalone streaming service called Discovery Plus this year.

The deal to give up its media business marks a major shift by AT&T, which fought hard to push a transaction through in 2018 to buy Time Warner for $85.4 billion US with the Justice Department trying to block the deal on anti-competitive reasons.

The deal is expected to close by the middle of next year.