T AT&T Inc

By Dave Sebastian 

AT&T Inc. will combine its sprawling WarnerMedia division with Discovery Inc., the companies said, unwinding the telecom giant's signature bet on media as pressure on the traditional entertainment business mounts.

AT&T would receive $43 billion in cash, debt securities and WarnerMedia's retention of certain debt under the all-stock deal, the companies said Monday. AT&T shareholders would get stock representing 71% of the new entity, while Discovery shareholders would own the rest, the companies added.

The deal would further consolidate a media business buffeted by cord-cutting and competition from streaming video. WarnerMedia owns cable channels such as HBO, CNN, TNT and TBS as well as the Warner Bros. television and film studio. Discovery has a portfolio that includes its namesake network and HGTV.

The Wall Street Journal first reported on Sunday that AT&T and Discovery were in talks for a combination.

The tie-up is a surprising U-turn by AT&T, which placed a massive bet on media with its 2018 acquisition of Time Warner Inc. for around $81 billion. That deal made it the world's most indebted nonfinancial company.

Discovery President and Chief Executive David Zaslav will lead the proposed new entity, the companies said.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

May 17, 2021 07:43 ET (11:43 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.