The streaming landscape just got a little more interesting. In a joint press release on Monday, AT&T (NYSE:T) and Discovery (NASDAQ:DISCA) (NASDAQ: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 (NASDAQ:NFLX) and the treasure trove of intellectual property that Disney (NYSE:DIS) brings to its streaming offering Disney+. The two companies boast 208 million and 104 million subscribers, respectively.

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