AT&T Offloads Media Division, Announces Mega-Merger With Discovery, Inc.The new media company will control Warner Bros. Studio, HBO Max and Discovery+, among other properties.

On the heels ofVerizon selling its stakein Yahoo and AOL earlier this month, another mega-merger has hit the media world.AT&T has announcedthat it will offload its WarnerMedia division to Discovery Communications, Inc. The new media company will control major streaming services and channels including HBO and HBO Max, Food Network, Warner Bros. Studio and Discovery+.

As a result of the deal, which is structured as aReverse Morris Trustin an all-stock transaction, AT&T will receive $43 billion in cash, debt securities and WarnerMedia's retention of certain debt. AT&T shareholders, meanwhile, would be allocated stock amounting to 71% of the newly merged entity. The remaining 29% will go to current Discovery shareholders.

"This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms," AT&T CEO John Stankeysaidin a statement. "For AT&T shareholders, this is an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity."

The merger is set to close in mid-2022, contingent on approval via vote by Discovery shareholders. Discovery estimates that the new company will bring in around $52 billion in revenue by the end of 2023.

Discovery President and CEO David Zaslav added, "It is super exciting to combine such historic brands, world-class journalism and iconic franchises under one roof and unlock so much value and opportunity...We will build a new chapter together with the creative and talented WarnerMedia team and these incredible assets built on a nearly 100-year legacy of the most wonderful storytelling in the world."

Zaslav will continue to lead the new company, the name of which will beannouncedwithin the coming weeks.

AT&T shares were up 4.42% as of 10 a.m. Monday, with Discovery shares jumping 5.89% in the same timeframe.