The transaction through which US-based media giant Discovery has acquired WarnerMedia, the content business of the AT&T telecoms firm, for over $40 billion, has officially closed.
The purchase, which was completed on Friday (April 8), will see the combination of WarnerMedia and Discovery and the creation of a new global media and entertainment firm, Warner Bros. Discovery (WBD).
The agreement, which was first disclosed in May last year, has been structured as a ‘Reverse Morris Trust’ transaction, and AT&T has received $40.4 billion in cash, alongside WarnerMedia’s retention of “certain debt.”
AT&T’s shareholders have also received, in total, 1.7 billion shares of WBD, representing 71% of available shares on a fully diluted basis. Existing Discovery shareholders own the remainder of the new firm.
The combined entity, as of today (April 11) is now trading on the NASDAQ under the ticker symbol WBD.
The deal represents an offloading by AT&T of Time Warner, which it acquired in a deal worth $85 billion in 2018 and renamed WarnerMedia but since then has struggled to remain relevant at a time of increased cord-cutting.
The executive leadership team for WBD has also been unveiled, with personnel drawn from both merging organizations, although the search is still on for a chair and chief executive of Warner Bros Discovery Sports.
Lenny Daniels, president of Turner Sports, and Patrick Crumb, president of Discovery’s regional sports networks, will both report to this position.
The joint venture, both parties have said, will “combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s leading non-fiction and international entertainment and sports businesses.”
In terms of personnel, key appointments include Bruce Campbell as chief revenue and strategy officer, Channing Dungey as chair of Warner Bros. Television Group, Kathleen Finch as chair and chief content officer at US Networks Group, JB Perrette as chief executive and president of global streaming and entertainment, Gunnar Wiedenfels as chief financial officer, and Gerhard Zeiler as president of international.
David Zaslav, Discovery’s current chief executive, will meanwhile remain in that position for WBD.
Regarding the executive appointments, Zaslav said: “I am proud that our new executive management team blends world-class leaders from both organizations as we take our first step toward one single cohesive, collaborative culture. [The] announcement combines a strong team of professional managers in a simpler organizational structure, with fewer layers, more accountability, and a singular strategic focus as a global pure-play content company.”
On the merger as a whole, he commented: “With our collective assets and diversified business model, Warner Bros. Discovery offers the most differentiated and complete portfolio of content across film, television, and streaming. We are confident that we can bring more choice to consumers around the globe while fostering creativity and creating value for shareholders.”
John Stankey, AT&T’s chief executive, added: “In WarnerMedia, Discovery inherits a talented and innovative team and a dynamic growing and global company that is well-positioned to lead the transformation that’s taking place across media and entertainment, direct-to-consumer distribution and technology. The combination of the two companies will strengthen WarnerMedia’s established and leading position in media and streaming.”
Last week, Jason Kilar, WarnerMedia’s chief executive, stepped down as the merger entered its final stages of completion.
The collaboration with Discovery is being seen as an attempt to compete with increasingly influential streaming players such as Disney+ and Netflix, creating a business with a projected 2023 revenue of $52 billion and adjusted earnings before interest, taxes, depreciation, and amortization of approximately $14 billion, plus estimated cost synergies of $3 billion.
WarnerMedia includes film studio Warner Bros, pay-television network HBO, cable entertainment and sports channels TNT and TBS, and news outlet CNN.
Discovery owns various non-fiction channels in areas including nature and food, plus pan-European sports broadcaster Eurosport, and has been building up a new OTT offering in the shape of Discovery+.
The combined company will have a strong sports rights portfolio given that Turner Sports in 2020 extended its US deal with Major League Baseball by seven years at a cost of around $3.2 billion and recently sealed a seven-year, $1.6 billion agreement to become a new broadcasting partner of ice hockey’s National Hockey League, replacing NBC.
Discovery’s most well-known sports offering is Eurosport, which broadcasts a variety of top events in sports including cycling, tennis, and golf.
It also holds rights to the Olympic Games in 50 countries across Europe in a four-games deal with the International Olympic Committee worth €1.3 billion ($1.6 billion), which runs to 2024.
Discovery’s other sports operations include streaming subsidiaries GolfTV and Play Sports Group, which operates various cycling and triathlon video channels.