Business

AT&T is in deal talks to create a new streaming giant with Discovery

at&t
  • AT&T is discussing a deal to split off content assets and combine them with Discovery, a source told Insider.
  • The deal, which could be announced in the coming days according to multiple reports, would create a new streaming giant better placed to take on Netflix and Disney.
  • Both companies declined to comment on the discussions.
  • See more stories on Insider’s business page.

AT&T, the telecom giant that also owns a host of media and entertainment outlets including HBO, TNT, CNN, and Warner Bros., is in talks with Discovery to combine content assets, a source told Insider.

Such a deal would create a new streaming giant better placed to compete with Netflix and Disney. It would also involve AT&T splitting off assets it acquired when it bought Time Warner for $85 billion in 2018.

Bloomberg was first to report the possible deal. The discussions are ongoing but a deal could be announced as soon as Monday, the Wall Street Journal later reported.

The deal would include several parts of WarnerMedia’s division, including CNN, TNT and TBS, according to the WSJ, which said a big stake of the new entity would be owned by AT&T shareholders.

AT&T declined Insider’s request for comment. A spokesperson for Discovery told Insider the company will “never comment on market speculation or rumors.”

AT&T had a market capitalization of about $230 billion as of Friday. Discovery, with its reality TV focused programming and networks including the Food Network, HGTV and TLC, has a market capitalization of about $17 billion.

The prospective deal raises questions about who will run the combined entity. The entertainment industry establishment has been lukewarm on WarnerMedia’s CEO Jason Kilar, who ruffled feathers in Hollywood with a straight to streaming strategy for newly released movies. The Wall Street Journal revealed that WarnerMedia paid some $200 million to smooth talent who were upset by the change.

Meanwhile, Discovery CEO David Zaslav is close with CNN chief Jeff Zucker, who had been positioning to run WarnerMedia.

As AT&T pursued its landmark merger with Time Warner three years ago, the company maintained that joining forces was the only way both could compete with the likes of Netflix and Amazon.

A deal could give HBO Max a much better shot at competing with Netflix and Disney+, since Discovery’s non-scripted content from HGTV and Food Network are hugely popular with viewers.

In addition, AT&T had been planning to expand HBO Max internationally, and the Discovery combination could be a big boost to those plans. Discovery owns European rights to Olympic Games and owns Eurosport. The news comes on the eve of the TV upfronts when advertisers commit billions of dollars to the traditional and streaming video business.

AT&T has seen steady growth of HBO Max since it launched last year. It gained almost 3 million subscribers in the first quarter of 2021, bringing total subscribers to 9.7 million. The platform is set to expand its reach from just the US, launching in Latin America next month. In total, HBO Max and HBO combined have about 64 million subscribers globally, compared to Netflix’s 208 million.

Discovery Plus launched in the increasingly crowded streaming market in January. The streaming platform is home to 55,000 episodes of shows from brands like HGTV, Food Network, TLC, A&E, History Channel, and the Discovery Channel, which airs the popular Shark Week series each year. Discovery Plus also features content from the BBC.

Read the original article on Business Insider

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