The deal, which is expected to close in mid-2022, comes with a valuation of $130 billion
Discovery, Inc. and WarnerMedia have set the name for their newly combined company, revealing Tuesday that they have chosen Warner Bros. Discovery as their united moniker. In a town hall with staffers, Discovery CEO David Zaslav and WarnerMedia CEO Jason Kilar also announced the company’s new tagline: “The Stuff That Dreams Are Made Of.”
AT&T announced on May 17 it was spinning off WarnerMedia into an independent company that will merge with Discovery, Inc. The full valuation of the newly combined company is estimated to be $130 billion, TheWrap has learned.
Zaslav will lead the new company as its CEO after the deal closes, which is expected to occur in mid-2022. No position has been designated yet for Kilar, who was named CEO of WarnerMedia last year. Kilar told WarnerMedia employees last week that he intends to remain CEO of WarnerMedia through 2022.
Under the terms of the all-stock agreement, AT&T will receive $43 billion (a figure subject to adjustment) in a combination of cash, debt securities and WarnerMedia’s retention of certain debt, and AT&T’s shareholders will receive stock representing 71% of the new company. Discovery shareholders will own 29% of the new company, which Zaslav said would announced its new name in coming days. The boards of directors at both companies have approved the merger.
The deal is subject to regulatory approval and a vote by Discovery shareholders will create an entertainment juggernaut that seeks to rival Netflix and Disney, and puts the likes of Warner Bros., CNN, Turner and Discovery’s stable of nonfiction networks under one roof — as well as two competing streaming services, Discovery+ and HBO Max. It also combines WarnerMedia’s U.S. sports rights like the NBA, MLB and March Madness with Discovery international sports giant Eurosport.
The combined company’s anticipated 2023 revenue is approximately $52 billion, with $15 billion of that expected in direct-to-consumer revenue. The merger should bring about “at least” $3 billion annually in cost savings via synergies, the companies said. That typically means layoffs are coming.
The new company will initially have $55 billion in debt, Zaslav said in a press conference with AT&T CEO John Stankey following the announcement. He said that the company would also have $8 billionin free cash flow that would allow the company to quickly pay down that debt while also leaving room for expansion and strategic investment.
The surprising deal marks a stunning reversal for AT&T, which is walking away from the content business less than three years after acquiring Time Warner for $85 billion.
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