WASHINGTON: AT&T is in talks to combine its media business with Discovery in a deal that would create a new entertainment powerhouse, a surprising move for a company that spent $85 billion to acquire the assets less than three years ago.
A deal could be announced as soon as this week, sources said. The idea is to combine Discovery’s reality-TV empire with AT&T’s vast media holdings, building a business that would be a formidable competitor to Netflix and Walt Disney.
Any deal would mark a major shift in AT&T’s strategy after years of working to assemble telecommunications and media assets under one roof. AT&T gained some of the biggest brands in entertainment through its acquisition of Time Warner, which was completed in 2018.The deal would underscore the difficulty telecom companies like AT&T and Verizon Communications have had finding a payoff from their media operations.
Through its WarnerMedia unit, AT&T owns CNN, HBO, Cartoon Network, TBS, TNT and the Warner Bros studio.
Discovery, backed by cable mogul John Malone, controls networks such as HGTV, Food Network, TLC and Animal Planet.
Chief executive David Zaslav has helped Discovery grow through acquisitions, including a purchase of HGTV owner Scripps Networks Interactive that closed in 2018. Discovery’s class A shares have risen more than 18 per cent this year, valuing the company at almost $24bn. AT&T has gained 12pc, giving it a market capitalisation of $230bn.
The companies are still negotiating the structure of a transaction, and details could change or the talks could fall apart, the people said.
AT&T CEO John Stankey has been cleaning house at the sprawling telecom titan, cutting staff and selling underperforming assets. The company has been funneling money into rolling out its 5G wireless network, which requires billions of dollars of investment, as well as expanding its fiber-optic footprint.