AT&T nears deal to create $ 150 billion streaming giant with Discovery

AT&T is set to close a deal to combine its content unit Warner Media with rival Discovery to create a media giant with an enterprise value of $ 150 billion, just a few years after acquiring the owner of CNN, HBO and Warner Bros. people briefed on the matter said. .

AT&T’s board was meeting on Sunday to approve the deal, said two people with first-hand knowledge of the matter. The agreed deal is expected to be announced in the coming days, the people said.

The combination would merge one of Hollywood’s most valuable catalogs – spanning Warner Bros. film and television studios, the HBO network, and a portfolio of cable channels, including CNN – with Discovery, which has been successful with a new streaming service aimed at the unscripted kitchen and home. renovation fairs.

After years of watching Netflix dominate the streaming landscape, the world’s largest media and tech companies have sought to strike back with their own services. Over the past year and a half, Disney, Apple, WarnerMedia, Comcast, Discovery and others have launched streaming platforms as they fight for a piece of the future of entertainment.

The structure of the deal remains unclear, but AT&T, which has a market value of around $ 230 billion, is expected to control most of the merged entity. Discovery has a market value of $ 24 billion.

AT & T’s decision to merge its content division with Discovery comes five years after agreeing to take over Time Warner for $ 85.4 billion as the telecommunications company sought to transform itself into the world’s largest vertically integrated content and distribution company.

In 2019, AT&T CEO John Stankey and Discovery CEO David Zaslav discussed combining their programming into a single streaming service for around $ 8 per month (excluding HBO). But when Disney revealed that it would be gifting its massive treasure trove of Star Wars, Pixar, Marvel, and Disney classics for just $ 7 a month for Disney Plus, they scrapped the plan. Instead, Stankey combined HBO with the rest of WarnerMedia’s programming into a single product, called HBO Max.

Discovery, the company behind HGTV, the Oprah Winfrey network and broadcaster Eurosport, launched a $ 5-per-month streaming service in January, which Zaslav said was “the biggest new venture” since joining. the company more than ten years ago.

This follows the launch of HBO Max, WarnerMedia’s new flagship streaming service that debuted in the United States last year for $ 15 per month.

HBO Max and Discovery Plus have made some traction in the streaming race. Discovery in April said it reached 15 million subscribers in its streaming business, while HBO Max had nearly 3 million subscribers in the first quarter, reaching 9.7 million retail subscribers at the end of the month. Of March.

However, the two companies are vying for much bigger rivals: Netflix has 208 million subscribers worldwide, while Disney Plus has attracted 104 million subscribers in just a year and a half since its launch.

WarnerMedia plans to launch HBO Max in Latin America and parts of Europe later this year.

Bloomberg first reported news of the talks between AT&T and Discovery. AT&T and Discovery declined to comment.

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