AT&T: WarnerMedia splits under $ 43 billion deal with Discovery

AT&T is parting ways with WarnerMedia as part of a $ 43 billion deal to merge its media business with that of Discovery Inc., the telecommunications giant announced on Tuesday.

AT&T shareholders will own 71% of the new Warner Bros. company. Discovery and will receive 0.24 shares of Warner Bros. Discovery for every single AT&T share they hold, according to Reuters.

“Instead of trying to assess market volatility in the short term and decide how to share value in the stock exchange process, spin-off distribution will allow the market to do what it knows best,” said AT&T CEO John Stankey. , in an official announcement.

“We are confident that both shares will be valued soon based on their strong fundamentals and attractive prospects,” he added.

Warner Bros. Discovery aims to “threaten” its biggest competitor in content streaming, which is none other than Netflix, despite WarnerMedia’s HBO Max platform already growing faster in the United States in the fourth quarter of last year, closing year with 74 million subscribers.

However, WarnerMedia’s merger with Discovery, which is expected to close in the second quarter of this year, comes at a time when Netflix is ​​showing signs of maturity, broadening its prospects.

AT&T expects to spend about $ 20 billion this year to further strengthen its fiber optic presence in home broadband internet services and expand its 5G footprint.

At the same time, the American telecommunications group will distribute a dividend of $ 1.11 per share, significantly reduced compared to $ 2.08 per share previously.

AT&T shares lost 4% in pre-conference Wall Street trading.