AT&T could merge its media business, bought less than three years ago for USD 85 billion, with Discovery, in a deal that could be announced very soon, Dow Jones reported, citing sources with knowledge of the matter. The talks value the AT&T business at over USD 50 billion including debt. The combined company, led by Discovery CEO David Zaslav, would try and meet Netflix and Walt Disney head one, bringing together Discovery’s reality-TV assets with AT&T’s media holdings.
The merger of the Time Warner operations will be structured as a Reverse Morris Trust, or a merger that is tax-free, Bloomberg reported, citing one of the sources close to the matter.
AT&T CEO John Stankey has been selling assets and cutting staff as a way to pay down debt and to fund its rollout of 5G and fibre networks and services. The company spun off its DirecTV operations in a transaction with TPG. It also agreed in December to sell its anime video unit Crunchyroll for USD 1.2 billion. It has in addition let go of its Puerto Rico phone operations, a stake in Hulu, a central European media group and almost all of its offices at New York’s Hudson Yards. Bloomberg noted that previous CEO Randall Stephenson oversaw 43 acquisitions.
Discovery and WarnerMedia each own a portfolio of cable channels that remain profitable but are losing subscribers as more people abandon pay-TV service and adopt streaming. AT&T’s CNN is looking for new ways to maintain its audience after the busy US presidential elections. TNT and TBS have general entertainment shows as well as sports rights to professional baseball, basketball and hockey. Discovery has the rights to broadcast the Olympics and professional golf outside the US.
