May 20, 2022
Warner Media

WarnerMedia and Discovery have agreed to merge their cable networks, TV shows and film studios in a $43 billion merger.

The move comes amid industry upheaval, with traditional TV giants struggling with declining ratings and consumer cord-cutting. The threat of streaming services is also increasing. Last week, Discovery Chief Executive David Zaslav complained to AT&T Chief Executive John Stankey that the company had not invited him to its Pebble Beach Pro-Am golf tournament, so he visited AT&T CEO John Stankey at a Greenwich Village brownstone. The two companies finalized the merger this weekend, a day after AT&T and Discovery executives met for the first time.

The new company will have a lot of people reporting to the same executive team. Toby Emmerich will remain president of the WarnerMedia Pictures Group, overseeing DC-based films and New Line Cinema. In addition, Kathleen Finch will take over the newly created role of US Networks Group chairman, overseeing more than 40 cable and satellite networks in the U.S.. She will report to Cummings, while Nancy Daniels will maintain oversight over Discovery Lifestyle Networks.

AT&T has received $43 billion from the merger, while WarnerMedia retains some debt. The new company will have a combined value of about $130 billion, with the combined companies holding 71% of the company and 29% of the rest. WarnerMedia CEO John Stankey said in a memo that he was thankful to his employees. The merger is expected to create a bigger competitor in the entertainment industry. In addition to the two major TV networks, it will also provide more content to the streaming platform.

The WarnerMedia-Discovery deal will be subject to regulatory approval. The combined company will have a combined subscriber base of 44 million and $15 billion for Discovery+. WarnerMedia also owns CNN, TBS, TNT, Cartoon Network, and Turner Classic Movies. Discovery’s spin-off will also add the Food Network, TLC, Animal Planet, and Investigation Discovery to its portfolio. By combining these two media companies, WarnerMedia will increase its leverage among pay-TV distributors.

The combined company will also merge HBO Max and Discovery+ into Warner Bros. Discovery, which will offer streaming services for entertainment and reality programming, may compete with rivals like Disney+ and Netflix. Disney+ offers a mix of both entertainment and reality content. In addition to the media businesses, HBO will also have a cable network. The combined company will likely bundle these two services, with Disney+ coming later.

The deal is a risky move, given that AT&T, Disney and other media companies are aggressively pursuing strategic options. In addition, AT&T’s rival Verizon recently sold most of its media assets for $5 billion. This is a highly competitive market with multiple rivals, such as T-Mobile, which has been making gains with its 5G phone service. But the deal is likely to close in the spring of 2022.