United States-based Telecom Company AT&T has come in terms with Discovery Inc. and is ready for a merger with the same to revolutionalize its media and entertainment operations. This merger will create a new company out of the two and combine assets like CNN, HBO, HGTV, and the Food Network.
Reason for the merger
AT&T is a Telecom company that provides one of the largest wireless networks in the United States. It entered the streaming world with its HBO Max in May 2020 but the platform has not provided suitable results. The platform has struggled against competitors in the market like Netflix and Disney+, both having 204 million and 164 million subscribers respectively in comparison to HBO’s 61 million.
HBO Max’s parent company WarnerMedia has witnessed a drop in its market value since AT&T bought it as Time Warner for 85.4 Billion USD to expand in Entertainment and media industry. The company has shown a major fall and that is the reason that AT&T has agreed upon this merger of WarnerMedia and Discovery.
After the deal will close, AT&T will receive an amount of $43 Billion in the form of cash, debt securities, and debt retention. The company will enjoy 71% stakes in the new venture and Disney Inc. will hold the remaining 29% representation.
The Future
This drop-in major Hollywood company like WarnerMedia reflects the changing nature of the business environment. In this new media ecosystem, streaming platforms are attracting a major audience due to their unique content and express-market strategy. In the views of various experts, AT&T and Disney Inc. have done a precise job in giving a thumbs up to this merger. This merger is going to be valued at $150 Billion, including Debt. The deal is set to close in mid-2022. Discovery President and CEO David Zaslav will lead the new venture.
The new venture will have a goal of reaching 400 million subscribers all across the globe. Both platforms have combined subscribers of 100 million and are aiming at their new target with their new company. It is projected that the new company will earn $52 Billion of revenue by the year 2023. Many experts are claiming the new venture to be the next big thing in the entertainment and media industry.
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