AT&T, Discovery join media brands as cord-cutting encroaches

FILE – In this Oct. 21, 2014 file photo, people pass an AT&T store in New York’s Times Square. AT&T will combine its media operations that include CNN HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV. The deal announced Monday, May 17, 2021, would create a separate media company as households increasingly abandon cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube. (AP Photo/Richard Drew, File)

FILE – In this Oct. 21, 2014 file photo, people pass an AT&T store in New York’s Times Square. AT&T will combine its media operations that include CNN HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV. The deal announced Monday, May 17, 2021, would create a separate media company as households increasingly abandon cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube. (AP Photo/Richard Drew, File)

NEW YORK (AP) — AT&T will combine its massive media operations that include CNN, HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.

It is a major directional shift for AT&T which squared off with the Justice Department less than three years ago in an antitrust fight when it wanted to acquire Time Warner Inc. for more than $80 billion. That was a fight that AT&T won.

It’s not immediately clear what the new company would mean for customers, but it likely allow the bundling of streaming services. For example, Disney offers its viewers Disney+, Hulu and ESPN.

A standalone streaming service for CNN is also a possibility.

AT&T operates HBO Max, and Discovery created its own streaming service. HBO Max and HBO have a combined U.S. subscriber base of about 44 million, and Discovery+ has about 15 million subscribers.

“The new company will be able to join the upper tier of global (streaming) players: Netflix, Disney and Amazon,” Craig Moffett of MoffettNathanson told investors.

However, Netflix has more than 200 million subscribers worldwide, and Disney+ has over 100 million.

In the all-stock deal, AT&T will receive $43 billion in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt. AT&T shareholders will receive stock representing 71% of the new company and Discovery stockholders will own 29% of the new company.

The new company will be in direct competition with Netflix, Amazon, Apple, Disney and Comcast, which are assembling a growing arsenal of original media content.

The combination announced Monday, the companies said, will able to invest more in original streaming content. It will house almost 200,000 hours of programming and bring together more than 100 brands under one global portfolio, including: DC Comics, Cartoon Network, Eurosport, Magnolia, TLC and Animal Planet.

Discovery CEO David Zaslav will lead the new company. The new company’s board will have 13 members, seven will initially appointed by AT&T, including the chairperson. Discovery will initially appoint six directors, including Zaslav.

The deal is expected to close by the middle of next year. It still needs approval from Discovery shareholders. AT&T stockholders don’t need to vote on the transaction.

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AP Business writers Anne D’Ínnocenzio and Michelle Chapman contributed to this report.