Recently, Discovery Communications (DISC.A) (DISC.B) (DISCK) shareholders officially approved the merger with WarnerMedia, AT&T's (T 0.91%) soon-to-be spun-off company. The resulting company will be Warner Bros. Discovery and begin trading on the Nasdaq Stock Market under the ticker "WBD" in early April. Before the new company forms, here's what AT&T and Discovery Communications shareholders need to know.

What happens if you own AT&T?

AT&T's WarnerMedia will represent 71% of the newly formed Warner Bros. Discovery, and its shareholders will receive approximately 0.24 shares of the new company for each share of AT&T stock owned. Before that happens, you will have the opportunity to decide whether you want to own just AT&T or Warner Bros. Discovery, or both companies.

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If you own AT&T stock at the end of trading on Monday, April 4, you will receive two temporary stocks in addition to your AT&T "T" stock before the market opens on Tuesday, April 5. If you sell "T" before the merger is complete, you will be selling AT&T common stock and the right to receive shares of WBD common stock. 

The first temporary stock you will receive before the market opens on Tuesday, April 5, is under the New York Stock Exchange (NYSE) ticker symbol "T WI." If you sell "T WI," you will be selling only AT&T common stock while retaining the right to receive shares of WBD common stock. 

The second temporary stock you will receive before the market opens on Tuesday, April 5, is under the Nasdaq symbol "WBDWV." If you sell "WBDWV" you will be selling your right to receive shares of Warner Bros. Discovery common stock while retaining your shares of AT&T common stock. 

AT&T Shareholders may not have very long to decide because the recording date for the new Warner Bros. Discovery shares is at the close of business on Tuesday, April 5. If you do nothing, you will retain your AT&T "T" common stock and own Warner Bros. Discovery common stock once the merger is complete. 

After the merger is complete, the temporary stocks "T WI" and "WBDWV" will cease to exist, and AT&T's "T" stock price will adjust lower to reflect the loss of WarnerMedia.

Finally, WBD will not issue any fractional shares of its common stock. As a result, you would receive cash compensation for any fractional shares within 10 business days of the merger.

What happens if you own Discovery Communications?

Discovery Communications will represent the remaining 29% of the new Warner Bros. Discovery company. Discovery Communications and its three share classes will no longer exist as the company, unlike AT&T, will fully be merged into Warner Bros. Discovery. 

Immediately before the merger, Discovery plans to reclassify its three share classes into one share class. Then, Warner Bros. Discovery will automatically convert each share of Discovery common stock into one share of WBD common stock. Warner Bros. Discovery's stock price has yet to be finalized.

Is Warner Bros. Discovery a good investment?

Warner Bros. Discovery has guided for an impressive $52 billion in revenue in 2023 with $15 billion being direct-to-consumer (DTC), which includes popular streaming services like HBO Max and Discovery Plus. For comparison, Walt Disney, in its fiscal year 2021, made $50 billion in revenue with its media and distribution arm -- $16.3 billion of which was DTC revenue.

Those revenue numbers look impressive, especially with Warner Bros. Discovery's estimated market cap of about $45 billion. However, WBD will be saddled with $58 billion in debt out of the starting gate, and the pressure to continually produce content will be costly. David Zaslav, CEO of Discovery and soon-to-be CEO of Warner Bros. Discovery, said Warner Bros. Discovery plans on spending $20 billion on content for 2022. If Disney is any indication, that cost will only rise each year -- Disney expects to spend $33 billion for its fiscal year 2022 after spending $25 billion for its fiscal year 2021. As interest rates continue to rise, it could become harder for Warner Bros. Discovery to raise capital, or at the very least, will increase the cost to borrow the money required to produce enough content to keep up with its competitors. 

As Warner Bros. Discovery gets its footing as a newly merged company, look to whether or not it can meet its revenue guidance and pay down some of its excessive debt. Until then, don't expect Warner Bros. Discovery stock to be a winner just yet.