A performer welcomes guests at Warner Bros. Movie World on July 15, 2020 in Gold Coast, Australia.
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AT&T and Discovery said on Monday that they would combine their media assets, in a bid to “form one of the largest global streaming players” by “accelerating both companies’ plans for leading direct-to-consumer (DTC) streaming services.”
- The deal will bring together the owner of CNN, HBO and movie studio Warner Bros. with Discovery’s portfolio of successful science, cooking or nature shows, creating a new major player in the streaming industry to better compete with the likes of Netflix, Disney, Apple or Comcast.
- The new company would have $52 billion in revenue in 2023 with $14 billion Ebitda (earnings before interest, taxes, depreciation and amortization), they said in a release, with cost synergies expected at an annual $3 billion. AT&T shareholders would own 71% of the entity and Discovery investors the other 29%.
- AT&T and Discovery planned two years ago to launch a joint streaming service but canceled the plan after Disney announced it would also enter the field with a cheaper subscription offer.
- AT&T bought Time Warner in 2018 for $81 billion after a judge denied the Trump administration’s attempt to block the deal. Chief Executive John Stankey, in his 10 months in the job, has since sought to shed assets to cut down debt.
The outlook. The merger is the latest sign of the race for scale all streaming players have embarked on in a bid to beef up their subscriber base and cope with the Covid-19 pandemic-triggered acceleration of consumers’ move toward streaming.
