AT&T, Discovery agree to merger of CNN, other media assets

AT&T shareholders will control 71% of new company

AT&T Inc. has agreed to merge its WarnerMedia division with Discovery Communications Inc., creating a streaming giant to compete with Walt Disney Co.'s Disney+ and Netflix. 

Discovery CEO David Zaslav will lead the combined company.

The combined company will own channels including CNN, HBO, TNT, TBS, Animal Planet, Food Network and the Warner Bros. franchise. 

Ticker Security Last Change Change %
T AT&T INC. 15.12 -0.19 -1.24%
DISCA n.a. n.a. n.a. n.a.

Under the terms of the deal, which is structured as an all-stock transaction, AT&T would receive $43 billion in cash and debt with its shareholders controlling 71% of the new company. Discovery shareholders would own the remaining 29%. Both AT&T and Discovery's board of directors have approved the merger, which still must be given the green light by Discovery shareholders. If approved, the transaction is expected to close in mid-2022.   

The deal comes nearly three years after AT&T closed on its $85.4 billion acquisition of Time Warner Inc. 

"With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins ... consumers with more diverse choices, talent and storytellers with more resources and compelling pathways to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet that is better positioned to compete with the world's largest streamers," said Discovery President and CEO David Zaslav in a press release. 

Zaslav will lead the new company, which will retain executives from both AT&T and Discovery

"For AT&T shareholders, this is an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity," AT&T CEO John Stankey said. 

AT&T will adjust its dividend to account for the distribution of WarnerMedia to AT&T shareholders. The company expects an annual dividend payout ratio of 40% to 43% on more than $20 billion of expected free cash flow.


AT&T shares were up 12% this year through Friday while Discovery shares were higher by 18%.