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WASHINGTON: AT&T has announced that it was spinning off its WarnerMedia unit and combining it with Discovery, creating an independent firm that could take on industry leaders such as Netflix in the fast-growing streaming sector.
The deal, which signals the telecom giant´s retreat from ambitions to be a player in the entertainment world, carves out the AT&T division which includes HBO, Warner Bros studios, and CNN.
AT&T will receive $43 billion and AT&T´s shareholders will own 71 percent of the new company, with Discovery — which operates Discovery Channel, Food Network, Animal Planet and others — holding 29 percent.
The spinoff creates a “pure play” media company that can ramp up its streaming efforts against rivals such as Netflix, Disney+, and Amazon Prime Video while allowing AT&T to focus on its mobile phone and broadband operations.
Discovery president-chief executive David Zaslav will lead the new company, which will include HBO´s “Games of Thrones” franchise, the Warner Bros library of “Batman” films, and TV channels such as Discovery, Cartoon Network, HGTV, TNT, TBS, and Eurosport.
“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” AT&T CEO John Stankey said.
“It will support the fantastic growth and international launch of HBO Max with Discovery´s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want.”
Zaslav said he was excited that the combination would “combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity.”
The deal however marks a reversal after the blockbuster acquisition announced in 2016 in which AT&T agreed to buy Warner for $85 billion as part of a move to combine content and distribution and compete with the likes of Comcast, owner of NBCUniversal.
