Discovery and AT&T: How a Huge Media Deal Was Done

Business is seldom smoothly and an anomaly in Discovery’s stock price was in line with the negotiations. Discovery’s shares inexplicably began to surge from $ 45 to $ 75 in February and March after Archegos, a little-known private investment firm that bet on Discovery and other companies via derivatives with billions of dollars in borrowed money, had a major trading scandal.

With banks forced to buy stocks to hedge their spiraling exposure to Archegos, Discovery’s market value rose nearly 60 percent for no apparent reason to outsiders. But by May, the stock was back where it was during Mr. Zaslav’s initial approach, and the two sides eventually forged a deal that gave 71 percent of the new company to AT&T shareholders and 29 percent to Discovery.

Now the trick was to close it before the word could come out.

One awkward conversation waiting for Mr. Stankey was with Jason Kilar, the former head of Hulu, who just a year earlier was enthusiastically tapped by AT&T to run WarnerMedia. To mark his first anniversary at work, Mr. Kilar had agreed, with the blessings of AT&T, to be profiled by the Wall Street Journal. In late April, he invited a reporter to interview him on the Warner Bros. lot in Burbank, California, unaware that his colleagues across the country were feverishly working to close the deal.

Sometime in the week of May 3, Mr. Stankey dropped the bomb: he informed Mr. Kilar that the company was about to change hands and it was unclear what role Mr. Kilar could play. Mr. Kilar’s 2,600 word journal profile containing a quote from Mr. Stankey was posted on May 14, three days before the deal was announced.

Usually a happy presence on Twitter, Mr. Kilar didn’t bother to share the article with his 37,000 followers. By the weekend, Mr. Kilar had hired entertainment power attorney Allen Grubman to begin negotiating his exit.

Just after 7:00 a.m. on Sunday, Mr. Zaslav boarded a business jet at a small airport on Long Island’s East End, not far from his home, to go to AT&T headquarters in Dallas and put the finishing touches on the business to give. But just over an hour after the flight began, Bloomberg’s black and orange terminal screens announced, “AT&T is in talks to combine content assets with discovery.”

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