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![]() Logo before merger | |
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Initiator | Discovery, Inc. |
---|---|
Target | WarnerMedia from AT&T |
Cost | US$43 billion |
Initiated | May 16, 2021 |
Completed | April 8, 2022 |
Resulting entity | Warner Bros. Discovery |
The Merger of Discovery, Inc. and WarnerMedia was first announced on May 16, 2021, and was completed on April 8, 2022, creating a new entity known as Warner Bros. Discovery. AT&T previously acquired Time Warner in 2018, and after nearly three years of managing it, decided to divest it to focus on its core business of telecommunications.
Warner Bros., Turner Broadcasting System, Scripps Networks Interactive and Discovery, Inc. have conjoined histories. Warner Bros. was founded on April 4, 1923, by four brothers, Harry, Albert, Sam, and Jack Warner. The company established itself as a leader in the American film industry [1] before diversifying into animation, television, and video games and is one of the "Big Five" American film studios, as well as a member of the Motion Picture Association (MPA). In 1965, Turner Broadcasting System was founded by Ted Turner and based in Atlanta, Georgia. A year later, Kinney National Company came into existence and it reincorporated as Warner Communications in 1972 before merging with Time Inc. in 1990 to become Time Warner. During its time as Warner Communications, the company made a number of further acquisitions. [2] [3]
In 1979, Warner Communications formed a joint venture with credit card company American Express called Warner-Amex Satellite Entertainment. American Express acquired a 50% stake in Warner Communications' cable television holdings for $175 million. [4] [5] This company owned such cable channels as MTV, Nickelodeon, The Movie Channel, and VH1 (which was launched in 1985 on the channel space left by Turner's Cable Music Channel). Warner Communications bought out American Express's half in 1984 and sold the venture a year later to the original iteration of Viacom, which renamed it MTV Networks (now known as Paramount Media Networks). [6] In 1982, Warner Communications purchased Popular Library from CBS Publications. Meanwhile in the same year, Cable Education Network was founded, launching The Discovery Channel three years later and was renamed to Discovery Communications in 1994.
Time Warner acquired Turner Broadcasting System in 1996, allowing it to reenter the cable industry. In 2001, it merged with America Online (AOL) to form AOL Time Warner in 2001, but the merger proved disastrous, with the media company reverting to its former name, Time Warner, in 2003. [7]
Time Warner spun off its cable division (later known as Spectrum owned by Charter Communications), AOL (now owned by Yahoo! Inc.) in 2009, and Time Inc. was spun out in 2013, which was later acquired by Meredith Corporation and is now known as Dotdash Meredith. [8] [9]
In 2018, Discovery Communications acquired Scripps Networks Interactive (a 2008 spun off from E. W. Scripps Company's cable division) and was renamed as Discovery, Inc [10] and AT&T acquired Time Warner and renamed it to WarnerMedia respectively. As WarnerMedia's new corporate parent, AT&T integrated its other media properties like Otter Media and AT&T SportsNet while dissolving Turner Broadcasting System in early 2019. [11]
On May 16, 2021, Bloomberg News reported that AT&T was considering an offer to divest equity interest in their media subsidiary WarnerMedia (the former Time Warner, which AT&T acquired in 2018 for just over $85 billion in an attempt to become a vertically integrated media conglomerate), and have it merge with Discovery, Inc. to form a new publicly traded company. [12] [13] AT&T and Discovery officially confirmed the agreement the next day; the merger would be structured as a Reverse Morris Trust, with AT&T shareholders holding a 71% interest in the new company's stock and appointing seven board members, and Discovery shareholders holding a 29% interest and appointing six board members. AT&T would receive US$43 billion in cash and debt from the divestment. The merger was expected to be completed in mid-2022. [14] [15] [16]
The new company would be led by Discovery's current CEO, David Zaslav; WarnerMedia's CEO Jason Kilar's position in the new company was uncertain. [17] Zaslav stated that the two companies would spend a combined US$20 billion annually on content (outpacing even Netflix). The company will aim to expand their streaming services, which includes WarnerMedia's HBO Max, to reach 400 million global subscribers. [18] It was stated that the company would aim to achieve $3 billion in cost savings via synergies within two years. [19]
On June 1, 2021, it was announced that the merged company would be known as Warner Bros. Discovery, and an interim wordmark was unveiled with the tagline "The stuff that dreams are made of"—a quote from the 1941 Warner Bros. film The Maltese Falcon , itself paraphrasing Shakespeare's The Tempest . Zaslav explained that the company aimed to be the "most innovative, exciting and fun place to tell stories in the world", and would combine Warner Bros.' "fabled hundred-year legacy of creative, authentic storytelling and taking bold risks to bring the most amazing stories to life" with Discovery's "integrity, innovation and inspiration." [20] [21]
In an SEC Filing on November 18, 2021, Discovery revealed that talks with AT&T had fallen through, in April 2021, due to disagreements over the ownership of the new company between AT&T and Discovery shareholders, and the amount of debt transferred to Discovery when they merged with WarnerMedia, before talks resumed on May 17, 2021. [22]
In November 2021, during an earnings call, Discovery Streaming CEO JB Perrette discussed possible options for its Discovery+ streaming service post-merger, including bundling the service with HBO Max and eventually merging them under a single platform with a mixture of both companies' technologies. He also noted that WBD may prioritize launching Discovery+ and HBO Max as a unified platform in markets where Discovery+ has yet to launch, such as another parts of the Asia-Pacific. [23] On March 14, 2022, Discovery CFO Gunnar Wiedenfels—who would assume the same position post-merger—confirmed that such a transition was a long-term goal. [24]
On December 22, 2021, the transaction was approved by the European Commission. [25] [26] On January 5, 2022, The Wall Street Journal reported that WarnerMedia and Paramount Global (at the time named ViacomCBS) were exploring a possible sale of either a majority stake or all of The CW, and that Nexstar Media Group was considered a leading bidder. [27] The reports also indicated that WarnerMedia and ViacomCBS could include a contractual commitment that would require any new owner to buy new programming from those companies, allowing them to reap some continual revenue through the network. [28] The CW's then-president-and-CEO Mark Pedowitz confirmed talks of a potential sale in a memo to CW staffers, but added that "It's too early to speculate what might happen." [29] [30]
On January 26, 2022, AT&T CEO John Stankey stated that the merger was expected to close sometime during the second quarter of 2022. [31] [32] On February 1, 2022, it was reported that AT&T had finalized the structure of the merger: WarnerMedia would be spun off pro rata to AT&T's shareholders, and then merge into Discovery Inc. to form the new company. [33] [34] The transaction was approved by the Brazilian antitrust regulator Cade on February 7, [35] followed by the United States Department of Justice on February 9. [36] On March 11, 2022, the merger was approved by Discovery's shareholders. Due to the structure of the merger, it did not require separate approval from AT&T shareholders. [37] [38]
In an SEC filing on March 25, 2022, AT&T stated that two-way trading of WBD stock with that of AT&T would begin on April 4, 2022, and that a special dividend would be issued the next day to give AT&T shareholders a 0.24 share in WBD for each share of AT&T common stock they hold. [39] [40] The merger was officially completed on April 8, 2022, with trading beginning on the Nasdaq on April 11. [41]