WarnerMedia and Discovery are merging to create a unified streaming portfolio

Logos of multiple brands owned by WarnerMedia and Discovery

Streaming services may actually be getting simpler for once, as AT&T and Discovery have announced the formation of a new company that combines WarnerMedia and the current Discovery, bringing together all of the assets of both companies. As you may know, WarnerMedia launched its HBO Max streaming service last year and killed off HBO Now and Go. Discovery, for its part, announced its own streaming offering, discovery+, in December, having launched it earlier this year.

As you'd expect, the goal of the deal is to strengthen each company's offerings and growth plans, specifically for direct-to-consumer offerings such as streaming services. WarnerMedia has a large portfolio of entertainment content, including HBO shows like Game of Thrones, as well as content from the DC comics universe, such as the recently-released Zack Snyder's Justice League, and more. Discovery, on the other hand, focuses more on informational and non-scripted content.

While the official announcement says the combination of the two companies will bring over 100 entertainment brands under a single global portfolio, it's not exactly clear how this content will be distributed to consumers. A unified subscription service could help simplify the increasingly crowded streaming market, and it would likely benefit the company in the long run.

The transaction will involve a $43 billion payment to AT&T including cash, debt securities, and some debt retention on WarnerMedia's part, with AT&T shareholders owning 71% of the new company. Discovery shareholders will own the remaining 29%. The new company is projected to have $52 billion in revenue in 2023, and it will create $3 billion in cost synergies, allowing for more investment into original content. The new company will be led by current President of Discovery, David Zaslav, and the Board of Directors will be comprised by 13 members - seven initially appointed by AT&T and six appointed by Discovery.

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