Why does Max bundle CNN

Media giant emerges from 43 billion deal

The new company will be led by Discovery boss David Zaslav. The Wall Street Journal had previously reported this - and emphasized that it was unclear whether the head of WarnerMedia, Jason Kilar, would stay on board. That remained open even after a management press conference on Monday. The name of the new company will be announced soon.

AT&T is said to benefit from the deal with $ 43 billion in cash, shares and debt assumptions, the company said. The shareholders of AT&T should also get a majority of 71 percent in the new company.

AT&T changes course

With the deal, AT&T is largely giving up its ambitions to be a big player in the media business after billions of dollars have been spent on it in recent years. AT&T paid more than $ 80 billion for WarnerMedia in 2018 - and got deeply in debt for it. Meanwhile, the group has to invest heavily in the expansion of its 5G cellular networks.

With the WarnerMedia deal, AT&T boss John Stankey initiated the withdrawal within a few months with the second huge acquisition of his predecessor Randall Stevenson. He had previously sold a 30 percent stake in the satellite specialist DirecTV, for which AT&T had once paid almost $ 50 billion.

Joining forces for the streaming business

The current deal is probably the next big step to consolidate forces in the competitive streaming market. The TV and film business is currently undergoing a profound change, which has been accelerated once again by the coronavirus pandemic. WarnerMedia is currently trying to jump on the bandwagon with the streaming service HBO Max, which also shows Warner films.

Netflix and Disney are particularly strong in the streaming business - and industry watchers are puzzling as to how many other services there is still room for in the market alongside them. Discovery boss Zaslav announced that the now merged companies are spending around 20 billion dollars on content - that is above the program budget of Netflix.

The two company bosses declined to explain their long-term plans for HBO Max and the Discovery + service offered by Discovery in detail, writes the Wall Street Journal. They could either remain separate or be combined into an even larger streaming service. "You have to have content that people love so much that they would run home and pay for it before they pay for dinner or a roof over their heads," the newspaper quoted the Discovery chief as quoting on a phone call with investors.

Cable television business is also weakening

Streaming is also thinning the revenues in the long lucrative cable television business in the USA. The Warner news channel CNN, which can be seen on cable TV in the US, saw an upswing last year with the election campaign for the White House. Recently, however, the number of viewers fell again. Zaslav said they wanted to keep CNN and expand it.

Telecom competitor Verizon has now also sold its expensive media acquisitions. At the beginning of the month he sold the online division with the Internet dinos Yahoo and AOL for five billion dollars to the financial investor Apollo Global Management. Verizon largely abandoned its ambitions to compete with heavyweights like Google and Facebook in online advertising.

Stock exchanges react positively

The deal sparked a positive response on the stock exchange: AT&T shares, which had lost around a quarter since 2016, rose by three percent after the deal was announced. The shares of Discovery also rose - they jumped twelve percent, as the "Wall Street Journal" reports.