FILE – In this Oct. 21, 2014 file photo, people pass an AT&T store in New York's Times Square. (Photo: Richard Drew, AP)
NEW YORK (AP) — AT&T will combine its massive media operations that include CNN HBO, TNT and TBS in a $43 billion deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.
Faced with cord-cutting and incursions by streaming services, major broadcast media companies have retrenched and sought strength through mergers.
The deal announced Monday would create a separate media company with households increasingly abandoning cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube.
In the all-stock deal, AT&T will receive $43 billion in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt. AT&T shareholders will receive stock representing 71% of the new company and Discovery stockholders will own 29% of the new company.
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AT&T had pushed into the streaming sector through HBO Max, a direct competitor with Netflix, Apple, Disney and Comcast. Discovery launched a standalone streaming service called Discovery Plus this year.
The deal to give up its media business marks a major shift by AT&T, which fought hard to push a transaction through in 2018 to buy Time Warner for $85.4 billion with the Justice Department trying to block the deal on anti-competitive reasons.
The deal is expected to close by the middle of next year.
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