AT&T is about to combine media empire with discovery reports

© Reuters. FILE PHOTO: The company logo for AT&T will appear on a screen on the floor of the New York Stock Exchange (NYSE) in New York, United States on September 18, 2019. REUTERS / Brendan McDermid

(Reuters) -US telecommunications giant AT&T Inc (NYSE 🙂 is about to make a deal to sell its media resources, including CNN and HBO, with Discovery (NASDAQ 🙂 Inc, the owner of lifestyle TV networks like HGTV and TLC, combine news reports citing unnamed sources.

The deal would mark the dissolution of AT & T’s acquisition of US media conglomerate Time Warner for $ 108.7 billion in 2018, underscoring the realization that television viewers have switched to streaming where economies of scale are needed to Netflix Inc (NASDAQ 🙂 to take over 🙂 and Walt Disney (NYSE 🙂 Co.

The combination would create a new company separate from AT&T that could be valued at $ 150 billion including debt, the Financial Times reported. Discovery currently has a market value including debt of approximately $ 30 billion.

A deal could be announced later this week, according to Bloomberg News, which first covered the news.

AT&T and Discovery spokespersons declined to comment.

The proposed deal would put together one of Hollywood’s most powerful studios, home to the Harry Potter and Batman franchises, and Discovery’s stall of blank home, cooking, nature and science shows.

By acquiring Time Warner, AT&T wanted to create a media and telecommunications powerhouse that combined content and distribution. This proved to be a costly strategy, however, as it sought to expand next-generation wireless services at the same time, and most recently borrowed $ 14 billion to buy more wireless spectrum.

AT&T has been trying to unwind its debt-laden acquisitions and improve its balance sheet. In February, it was agreed to sell a third of the DirecTV satellite television service, which the company bought for around $ 68 billion in 2015, to TPG Capital to value the deal at $ 16.25 billion.

HBO and HBO Max now have 63.9 million subscribers worldwide, compared to more than 100 million for Disney + by Walt Disney Co and 207.6 million for Netflix.

Discovery, whose portfolio includes Animal Planet and the Discovery Channel, reaches 88.3 million US households. The streaming service Discovery +, launched in January, has 15 million subscribers.

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