Less than three years after AT&T spent more than $ 85 billion and millions more to fend off a government challenge to buy Time Warner, one of the biggest prizes in the media, the phone company signed up for one decided on a completely different strategy.
AT&T is in advanced talks to merge its media businesses, including CNN, with Discovery Inc. Two people were informed of the deal on Sunday. The plan would include all of AT & T’s Warner Media assets, including HBO and Warner Bros., one respondent said. The parties could announce a deal as early as Monday, the person said, saying the talks were still ongoing and the final details had not yet been worked out.
Should AT&T and Discovery agree on a deal, two of the country’s largest media companies would be merged. AT & T’s WarnerMedia group also includes the sports-heavy cable networks TNT and TBS. Discovery has a strong line of reality-based cable channels including Oprah Winfrey’s OWN, HGTV, the Food Network and Animal Planet.
WarnerMedia is led by Jason Kilar, 50, one of the first streaming pioneers and the first CEO of Hulu. David Zaslav, 60, has headed Discovery for 14 years and helped make it a reality giant. It is unclear who would run the new business.
Bloomberg News first reported on the potential deal.
The deal would create a new company bigger than Netflix or NBCUniversal. WarnerMedia and Discovery had combined sales of more than $ 41 billion with operating income of over $ 10 billion last year. That would have vaulted it in front of Netflix and NBCUniversal and behind the Walt Disney Company.
In other words, in order to compete for an audience that is increasingly tied to Facebook, YouTube or TikTok, media companies need to get even bigger. It could spark another round of media deals.
Both AT&T and Discovery have invested heavily in streaming to compete with Netflix and Disney. AT&T poured billions into the development of HBO Max, a streaming platform that now has around 20 million customers. Discovery has 15 million streaming subscribers worldwide, most of them for its Discovery + app.
The merger would also be a major U-turn for AT&T, a telecommunications giant better known for maintaining fiber optic lines and cell towers than producing entertainment and promoting Hollywood talent. Industry watchers questioned AT & T’s daring purchase of Time Warner at a time when cable cutting was only accelerating. The spin-off indicates a failed acquisition strategy.
“AT&T didn’t know what they were buying,” said Brian Wieser, a longtime Wall Street analyst. “The strategy underlying the acquisition” was probably flawed. “
Brooks Barnes, Lauren Hirsch and Andrew Ross Sorkin contributed to the coverage.
This is a developing story. Check for updates again.