AT&T In Advanced Talks To Merge WarnerMedia And Discovery

AT&T (NYSE:T) is finalizing a merger of WarnerMedia and Discovery in a deal aimed at strengthening the combined company against rival streaming giants Netflix (NASDAQ:NFLX) and Walt Disney Co., (NYSE:DIS) according to multiple media reports.

A deal could be announced as soon as Monday (May 17).

The merger would combine Discovery with all of WarnerMedia, which will become a new publicly traded company co-owned by AT&T and Discovery shareholders. AT&T is likely to spin off WarnerMedia in a so-called reverse morris trust and merge it with Discovery.

AT&T shareholders will own most of the voting power in the new company. Discovery has a $16 billion U.S. market capitalization and a $30 billion U.S. enterprise value.

AT&T acquired Time Warner, since renamed to WarnerMedia, for $85 billion U.S. in equity value in 2018. If approved by regulators, the deal would effectively reverse AT&T’s years-long plan to combine content and distribution in a vertically integrated company.