AT&T to Spin Off WarnerMedia, Merge It With Discovery

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The companies AT&T and Discovery confirmed on Monday that AT&T would spin off WarnerMedia, which would then merge with Discovery under a new agreement. Discovery President & CEO David Zaslav would lead the new company. AT&T and Discovery aim to complete the transaction by mid-2022, if Discovery shareholders and regulators approve the deal.

In the all-stock transaction, AT&T would receive $43 billion in cash, debt securities, and "WarnerMedia's retention of certain debt." AT&T's shareholders would receive 71% of the new spinoff company's stock, while Discovery's shareholders will receive 29%. The new company could be valued as much as US$150 billion, although it would also have US$55 billion in debt. AT&T and Discovery project that the new company would have revenue of about US$52 billion in 2023.

WarnerMedia's assets include the Cartoon Network (with the Toonami and Adult Swim programming blocks), Boomerang, HBO Max, VRV, and other channels and services that have offered anime in their programming. (AT&T agreed to sell the Crunchyroll service to Sony for US$1.175 billion last year, but the U.S. Justice Department extended its antitrust review of that deal.) On the Discovery side, the Discovery Family channel (formerly known as The Hub) featured programming with some Japanese roots such as Transformers, Pac-Man, and Deltora Quest.

WarnerMedia also includes Warner Bros. Japan, which is a production company involved in several anime properties such as Is It Wrong to Try to Pick Up Girls in a Dungeon?, Food Wars! Shokugeki no Soma, and JoJo's Bizarre Adventure. Warner Bros. Japan and its parent also handle overseas and domestic live-action film productions of Japanese properties such as Godzilla, Rurouni Kenshin, Gintama, and Death Note.

The New York Times reports that the new company would be the second-largest media company in the United States, below only Disney and above Netflix and NBCUniversal.

The Hollywood Reporter posted in November that WarnerMedia was cutting 5% to 7% of its workforce, which amounted to 1,250 to 1,750 jobs.

Sources: AT&T, Bloomberg (Ed Hammond), Indiewire (Zack Sharf), New York Times (Edmund Lee and John Koblin)

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