Please ensure Javascript is enabled for purposes of website accessibility

AT&T Will Spin Off HBO to Merge With Discovery

By Danny Vena - May 17, 2021 at 11:26AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The move will create a new streaming powerhouse.

The streaming landscape just got a little more interesting. In a joint press release on Monday, AT&T (T 0.19%) and Discovery (DISCA) (DISCK) announced that WarnerMedia would be spun off and merged with Discovery to create a new stand-alone company. The combination would result in a content powerhouse and one of the largest global streaming players. 

The announcement confirmed rumors that had swirled all weekend; they were first reported by Bloomberg on Sunday. The deal will create a company that owns nearly 200,000 hours of popular programming and more than 100 well-known brands. These include HBO, CNN, the Cartoon Network, Adult Swim, TBS, TNT, and DC Comics. It will also house HGTV, the Food Network, TLC, and Animal Planet. The new company will also have expanded global reach, spanning more the 220 countries with broadcasts in 50 languages.

Man pointing remote at a TV.

Image source: Getty Images.

Under the terms of the agreement, which will require regulatory approval, AT&T would receive $43 billion, and its shareholders would own 71% of the new company, while Discovery stockholders would gain ownership of 29%. Discovery CEO David Zaslav will head the new company, and the deal is expected to close in mid-2022.

AT&T has continued to sell off its media assets in recent months. The media and telecom giant sold its DIRECTV unit to TPG, while also selling its anime-focused Crunchyroll streaming video service to Sony in a deal valued at $1.2 billion.

This latest spinoff is an apparent acknowledgement of the difficulties in competing in the global streaming market with first-mover and current leader Netflix (NFLX -0.49%) and the treasure trove of intellectual property that Disney (DIS 4.88%) brings to its streaming offering Disney+. The two companies boast 208 million and 104 million subscribers, respectively.

Danny Vena owns shares of Netflix and Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool recommends Discovery (C shares). The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AT&T Inc. Stock Quote
AT&T Inc.
T
$18.05 (0.19%) $0.04
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$117.92 (4.88%) $5.49
Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$242.91 (-0.49%) $-1.20
Warner Bros. Discovery, Inc. Stock Quote
Warner Bros. Discovery, Inc.
DISCK
Warner Bros. Discovery, Inc. Stock Quote
Warner Bros. Discovery, Inc.
DISCA

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.