Discovery, WarnerMedia confirm merger; David Zaslav to lead company

In a move that will significantly redraw the entertainment media landscape, Discovery Inc. and AT&T’s WarnerMedia have unveiled plans to merge and “create a premier, standalone global entertainment company.” The deal ...
May 17, 2021

In a move that will significantly redraw the entertainment media landscape, Discovery Inc. and AT&T’s WarnerMedia have unveiled plans to merge and “create a premier, standalone global entertainment company.”

The deal will combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s non-fiction and international entertainment and sports portfolio, bringing together under one umbrella such television properties as Discovery Channel and its sister cable nets with HBO, CNN, TBS and TNT; as well as streamers including HBO Max and Discovery+ and the Warner Bros. film studio.

David Zaslav (pictured), Discovery Inc. president and CEO, will lead the new company. The announcement made no mention of current WarnerMedia CEO Jason Kilar, but the companies say the leadership will be comprised of “a best-in-class management team and top operational and creative leadership from both companies.” Former Hulu chief exec Kilar was appointed as CEO at WarnerMedia in April of 2020, and has presided over significant restructuring at the company since then.

The new company’s board of directors will consist of 13 members, wit seven initially appointed by AT&T, including the chairperson of the board; Discovery will initially appoint six members, including CEO David Zaslav.

Under the terms of the agreement, in shedding its media assets AT&T is set to receive US$43 billion (subject to adjustment) in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt, and AT&T’s shareholders would receive stock representing 71% of the new company. Meanwhile, Discovery shareholders would own 29% of the new company. The Boards of Directors of both AT&T and Discovery have approved the transaction.

In a release, the companies said the new company “will own one of the deepest libraries in the world with nearly 200,000 hours of iconic programming and will bring together over 100 of the most cherished, popular and trusted brands in the world under one global portfolio,” adding, “The new company will be able to increase investment and capabilities in original content and programming; create more opportunity for under-represented storytellers and independent creators; serve customers with innovative video experiences and points of engagement; and propel more investment in high-quality, family-friendly non-fiction content.” Currently, the two companies spend a combined $20 billion on films and programming for linear and streaming services.

The deal is expected to close in 2022, with projected revenue in 2023 of approximately $52 billion, and adjusted EBITDA of approximately $14 billion.

“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” said AT&T CEO John Stankey in a statement. “It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want.

“For AT&T shareholders, this is an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity. AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend. Plus, they will get a stake in the new company, a global media leader that can build one of the top streaming platforms in the world.”

“During my many conversations with John, we always come back to the same simple and powerful strategic principle: these assets are better and more valuable together,” offered Discovery Inc. CEO David Zaslav. “It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity. With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins…consumers with more diverse choices, talent and storytellers with more resources and compelling pathways to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet that is better positioned to compete with the world’s largest streamers.

“We will build a new chapter together with the creative and talented WarnerMedia team and these incredible assets built on a nearly 100-year legacy of the most wonderful storytelling in the world. That will be our singular mission: to focus on telling the most amazing stories and have a ton of fun doing it.”

An investor call is slated shortly. At press time, Discovery Inc. stock is up by 18% in pre-market trading.

About The Author
Barry Walsh is editor and content director for realscreen, and has served as editor of the publication since 2009. With a career in entertainment media that spans two decades, prior to realscreen, he held the associate editor post for now defunct sister publication Boards, which focused on the advertising and commercial production industries. Before Boards, he served as editor of Canadian Music Network, a weekly music industry trade, and as music editor for As content director, he also oversees the development of content for the brand's market-leading events, the Realscreen Summit and Realscreen West, as well as new content initiatives.