Mike Coppola/Getty Images for WarnerMedia
The merger of AT&T s WarnerMedia with media company Discovery includes at least $3 billion of annual cost synergies.
AT&T didn t detail these cost cuts when it announced the merger on Monday.
Cost synergies often mean layoffs.
US telecom giant AT&T on Monday announced it would merge its content unit WarnerMedia with media company Discovery, creating a new streaming giant that could go head-to-head with Netflix and Disney.
In the press release, AT&T highlighted that the deal had at least $3 billion in expected cost synergies annually. These synergies, or cost reductions, would allow the newly formed company to invest in its content and scale its business, AT&T said.
By Jason Hall
May 17, 2021
AT&T announced a deal to combine its content unit WarnerMedia with Discovery in an effort to compete with other major streaming services on Monday (May 17).
CNBC reports AT&T will create a new business merging Time Warner which was acquired for $85 billion just under three years ago with Discovery, creating a new business separate from AT&T that could possibly be valued at as much as $150 billion, including debt, according to
AT&T said it would receive an aggregate amount of $43 billion in a combination of cash, debt and WarnerMedia s retention of certain debt as part of the agreement announced on Monday.
Last year it was reported that AT&T was looking to sell off Warner Bros. Interactive Entertainment, the division responsible for publishing and developing video games like the Batman: Arkham series, Mortal Kombat and more.
A few months later, it seemed that those discussions had died down, but big changes are now on the way this year.
Today, AT&T announced that it has agreed to spin off WarnerMedia and its subsidiaries with Discovery to form a new media company. The deal will see AT&T receive $43 billion and form one of the largest standalone entertainment companies, which will be particularly important in the years to come as company begins switching to streaming.
AT&T to spin off WarnerMedia in tie-up with Discovery
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Last Updated: May 17, 2021, 07:07 PM IST
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Synopsis
When the deal is finalized, AT&T will receive $43 billion and AT&T s shareholders will take stock representing 71 percent of the new company, with owners of Discovery which operates Discovery Channel, Food Network, Animal Planet and others holding 29 percent.
Agencies
The slump in WarnerMedia s value highlights the changing landscape in media as traditional Hollywood giants lose ground to new streaming players.
AT&T said Monday it was spinning off its WarnerMedia unit and combining it with Discovery, creating a new standalone media giant and ending the telecom group s ambition to become a content and delivery powerhouse.