Under the terms of the agreement, which was concluded in the form of the Reverse Morris Trust, AT&T received $ 40.4 billion at the time of closing the transaction. in cash and WarnerMedia will keep some of its debt. AT&T shareholders received an additional 0.241917 shares in WBD for each AT&T share they held at the time of closing.
In total, AT&T shareholders received 71 percent. the shares of the combined entity. The remaining shares in the new company belong to the existing shareholders of Discovery. In addition to the new stake in WBD, AT&T shareholders own the same number of AT&T shares as before.
A merger Discovery with WarnerMedia, previously owned by AT&T, it was announced in May last year. In December, she gave her unconditional consent to the transaction the European Commission, and at the beginning of this year. the merger was approved by AT&T shareholders, the Federal Trade Commission and the US Department of Justice, and – in March – by Discovery shareholders.
Zaslav: This is a milestone not only for Warner Bros. Discovery
It was announced on Friday evening that the transaction was finalized. As of Monday, the combined company will operate as Warner Bros. Discovery, on the US stock exchange Nasdaq to replace Discovery, will be abbreviated as WBD.
– Today’s event is a milestone not only for Warner Bros. Discovery, but also for our shareholders, distributors, advertisers, creative partners, and – most importantly – for our audience around the world – comments David Zaslav, CEO of Warner Bros. Discovery, former head of Discovery.
– By combining our potentials and various business models, Warner Bros. Discovery will offer viewers a diverse and complete portfolio of content – available in cinemas, TV and streaming platforms. We are convinced that we will be able to offer our recipients a wealth of formats, and the merger of our companies will foster their further development – while meeting the expectations of our shareholders. I am very enthusiastic about our teams working together and the development of Warner Bros. Discovery as a place where new, fascinating stories will be born – assures Zaslav.
– Thanks to the merger with WarnerMedia, Discovery gains a talented and innovative team. A new, rapidly growing organization with a global reach and competences is being created, allowing it to lead the transformation that is currently taking place in the media and entertainment market, direct-to-consumer distribution and the entire technology industry. The merger of the two companies will also strengthen WarnerMedia’s well-established and leading position in the world of media and streaming, and our shareholders will gain a significant stake in Warner Bros. Discovery and its future success, says John Stankey, CEO at AT&T.
Today, we are proud to announce that WarnerMedia and Discovery, Inc. are now Warner Bros. Discovery. Follow @wbd for all new company updates.
Learn more: https://t.co/EGcJ0A29t8 pic.twitter.com/Rjv121upRr
—WarnerMedia (@WarnerMedia) April 8, 2022
The announcement announced that Warner Bros. Discovery will offer a variety of proprietary and licensed content available on TV, in cinemas, and on streaming platforms. The new offer combines entertainment formats, sports coverage and news programs, so far provided by WarnerMedia, and non-fiction content, international entertainment and sports known from Discovery channels.
The brands of the new group include channels and services such as Discovery Channel, Discovery +, Warner Bros. Entertainment, CNN, CNN +, DC, Eurosport, HBO, HBO Max, HGTV, Food Network, Investigation Discovery, TLC, TNT, TBS, truTV, Travel Channel, MotorTrend, Animal Planet, Science Channel, New Line Cinema, Cartoon Network, Adult Swim, Turner Classic Movies. In Poland, TVN Grupa Discovery and HBO Polska belong to the combined group.
AT&T invests in 5G and optical fibers
The head of AT&T also describes what the telecom will spend the money from this transaction on.
– We are on the threshold of epochal communication challenges and thus we are entering a new era in the history of AT&T. Due to the finalization of our transaction, we are planning record investments in the development of areas such as 5G and optical fibers – which are characterized by high growth dynamics. At the same time, we want to be a leader in the American broadband market – he lists.
– We also want to increase the emphasis on the return on investment for our shareholders. We will invest in development, improve the financial balance and reduce the amount of debt, while offering high dividends – making our shares one of the best in this respect on the American market – announces Stankey
Warner Bros. Discovery with the management team, logo and slogan
Announcing in the spring of last year your merger, Discovery and WarnerMedia have said the new company’s board of directors will consist of 13 members, initially six to be appointed by AT&T and six (including David Zaslav) by Discovery.
David Zaslav at Warner Bros. Discovery will serve as president and CEO. The chairman of the board of directors will be Samuel Di Piazza, currently a member of the board of directors of AT&T.
In addition to them, the Supervisory Board of Warner Bros. Discovery entered:
– Robert Bennett (director at Discovery since 2008, also managing director at Hilltop Investments),
– Li Haslett Chen (founder and CEO of Narrativ),
– Richard Fisher (2005-2015 president and CEO of the Federal Reserve Bank in Dallas),
– Paul Gould (member of Discovery’s board of directors since 2008, also managing director of Allen & Company Incorporated),
– Debra Lee (member of the board of directors of AT&T, head of BET Networks in 2006-2018),
– John Malone (on the board of directors of Discovery since 2008, and also a member of the supervisory boards of companies from Liberty Global),
– Fazal Merchant (advisor to Sixth Street Partners, former head of Tanium),
– Steven Miron (member of Discovery’s board of directors since 2008, also one of the heads of Advance / Newhouse Partnership),
– Steven Newhouse (one of the heads of Advance / Newhouse Partnership),
– Paula Price (Former Vice President and CFO at Macy’s)
– Geoffrey Yang (AT&T board member, partner and managing director at Redpoint Ventures).
It was noted that appointed to the board of directors of Warner Bros. Discovery, individuals who are currently members of the AT&T board of directors will resign from the latter functions. With the concern Jason Kilar, the head of WarnerMedia for the past two years, is leaving.
In the middle of last year the Warner Bros. logo has already been presented. Discovery and the company’s headline: “the stuff that dreams are made of.”
– Our common vision is a company dealing with pure entertainment. Combining the world’s most respected formats with the best programming genres, including TV and premium films, animation, world sports and news, children and families, lifestyle – entertainment under one roof, said David Zaslav in May last year, when the transaction was announced .
Discovery and WarnerMedia will save $ 3 billion together
The merger of the concerns is to allow them to achieve higher cash flows, which they will enable quick reduction of the debt level – to the value of 3 times the annual EBITDA profit within 24 months (from approx. 5 times at the time of the merger). After that, the debt is to remain in the range of 2.5-3 times the annual EBITDA. WarnerMedia is expected to receive funding from JP Morgan and its Goldman Sachs subsidiaries.
In the presentation from May last year. it was reported that if the merger is finalized in the middle of next year, In 2023, the new entity is expected to reach $ 52 billion in revenues, of which over $ 15 billion from digital subscribers. Last year Discovery and WarnerMedia combined had $ 39 billion in revenue.
Adjusted EBITDA of the merged companies in 2023 is expected to reach USD 14 billion, against USD 12 billion of their total adjusted EBITDA last year. Cost synergies are projected at over $ 3 billion.
A new concern in over 220 countries
The concern was created as a result of a merger will be present in over 220 countries and 50 language areas. His video library will have over 200,000. hours.
– The new company will be able to compete worldwide in the rapidly growing service sector directly to consumers – providing compelling content to subscribers across its entire offer, including HBO Max and the recently launched discovery + – announced in a release in May this year. WarnerMedia’s offer was noted. mainly includes feature productions, while Discovery creates a lot of non-fictional content.
“The new company will be able to invest in more original content for streaming platforms, increase the programming capacity of its global pay linear stations and broadcast channels in individual markets, and offer more innovative video experiences,” it said.
– The agreement combines two entertainment leaders with complementary strengths in the field of content and positions the new company as one of the leading global streaming platforms. It will support the fantastic growth and international expansion of HBO Max and the global presence of Discovery, and will achieve the efficiency that allows you to create more great content to give consumers what they want, emphasized John Stankey in May last year.
He noted that AT&T will focus on the telecommunications market, while the shareholders of the telecom will additionally own shares in the new entity.
WarnerMedia bought for $ 85 billion
WarnerMedia primarily owns TV broadcasters CNN, HBO and Cartoon Network, as well as the Warner Bros. film company. In mid-2018, the company, then operating under the name Time Warner, was acquired by telecommunications operator AT&T for approximately $ 85 billion, of which $ 42.5 billion in cash.
The transaction was announced in the fall of 2016, after which it took almost two years to obtain approval from the federal court for its implementation. Donald Trump spoke negatively about it, already during the campaign before the presidential election in 2016, he announced that he would block it.
Currently, AT&T focuses on the telecommunications market, collects funds for the purchase of frequencies for the development of the 5G network. Recently, the company took out a loan of $ 14 billion, and in February this year. sold to TPG Capital fund a third of the shares of the DirecTV TV platform for USD 16.25 billion. In 2015, he bought it for $ 68 billion.
Discovery bought Eurosport and Scripps from TVN
Discovery in 2012-2015 took over 100 percent. Eurosport shares, and at the beginning of 2018, Scripps Networks Interacitve, the then owner of the TVN Group, bought for USD 14.6 billion, paying $ 8.4 billion in cash and the rest in their shares.
In the second quarter of 2021, Discovery has achieved revenue increase by 21 percent up to $ 3.06 billion and net profit from 271 to 672 million dollars.
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