WarnerMedia, Discovery announce merger

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AT&T’s WarnerMedia division and Discovery Inc. are planning a merger aimed at, among other things, taking on Disney and Netflix in the ongoing streaming wars.

News of the deal surfaced Sunday, May 16, 2021 and was officially announced Monday, May 17, 2021.

The $43 billion deal, which isn’t expected to close until mid-2022, means AT&T will mostly abandon the strategy of combining telecom with content driven business.

AT&T acquired what became WarnerMedia in 2018.

Now, AT&T appears to be returning to its roots by spinning off WarnerMedia and merging it with Discovery. The move will allow AT&T to focus on its broadband and wireless businesses, which have required heavy investments to upgrade to 5G and acquire key portions of the wireless spectrum.

In February 2021, AT&T announced it would spinoff its DirecTV, AT&T TV and U-verse video brands to a private equity group, another sign that it’s exiting the content business.

Discovery, meanwhile, acquired Scripps Networks Interactive in 2017, a deal that included HGTV and Food Network, which were combined with its existing networks OWN, Discovery Channel and other prominent cable and digital brands.

In January 2021, Discovery launched Discovery+, a streaming platform that culls content from across all of its properties with original programming mixed in.

WarnerMedia, meanwhile, has its own streamer, HBO Max, launched in August 2020, that features film, TV and original content from some of the biggest names in entertainment, including Warner Bros. and its namesake premium network.

Although no specific plans have been announced, it appears the new company will aiming to leverage the power of the services to take on rivals Netflix and Disney+. It’s not clear if that could include merging the two services or bundling them.

While Netflix remains its own entity and invests billions in original content and licensing other TV shows and movies, Disney+ is able to draw on its own film and TV library as well as those it acquired when it bought most of 21st Century Fox’s assets.

Earlier in 2021, broadband and wireless rival Verizon announced it would sell AOL and Yahoo!, two businesses it had acquired in a similar strategy of attempting to own both content and the distribution channels it flows over.