AT&T and Discovery are negotiating the spinoff of AT&T’s media business and its merger with Discovery Inc.
Bloomberg’s Ed Hammond reported:
AT&T Inc. is preparing to spin off its media business and merge it with Discovery Inc. in a tax-friendly deal, according to people with knowledge of the matter, a surprise reversal for a company that spent $85 billion to acquire the assets less than three years ago.
A deal could be announced as soon as this week, said the people, who asked not to be identified because the information is private. The transaction will be structured as a so-called Reverse Morris Trust, or a merger with another company that’s structured to be tax-free, one of the people said.
Brent Lang and Cynthia Littleton wrote for Variety:
Multiple sources said the deal under discussion was a joint venture that would merge AT&T’s media assets — primarily the collection of networks and the storied Warner Bros. studio — with Discovery’s collection of domestic and international cable channels, anchored by Discovery, TLC, Animal Planet and OWN as well as lifestyle juggernauts Food Network and HGTV. The two companies are looking to combine forces to add heft to the program offerings on newly launched streaming services, AT&T’s HBO Max and Discovery’s Discovery Plus.
The NYT’s Edmund Lee and John Koblin noted:
The transaction would create a new company bigger than Netflix or NBCUniversal. WarnerMedia and Discovery together generated more than $41 billion in sales last year, with an operating profit of over $10 billion. That would have vaulted the combined company ahead of Netflix and NBCUniversal and behind the Walt Disney Company.
