Mumbai: Discovery’s mega-deal to merge with AT&T’s WarnerMedia business is all set to close in mid-2022, subject to approval by Discovery stockholders and additional closing conditions.
In the latest development, Discovery has won approval from the European Commission, the executive body of the European Union (EU) to take sole control of WarnerMedia from AT&T in the two companies' megadeal announced last year. That move comes after Discovery chief David Zaslav said that Europe had granted unconditional anti-trust clearance to the deal.
"The Commission concluded that the proposed acquisition would raise no competition concerns given that, following the transaction, the combined entity would continue to face sufficient competition from other players," said the EC, the antitrust enforcer for the European Union. "In addition, the Commission found no competition concerns stemming from the vertical and conglomerate links between the activities of the companies, since the latter would not have the ability nor the incentive to engage in foreclosure practices.”
Meanwhile, the deal’s "Reverse Morris Trust" structure has also received a favorable rating from the IRS, which means that it should come out tax-free for AT&T shareholders provided they retain the majority stake in the new company as planned.
In May 2021, AT&T and Discovery had reached a definitive agreement to combine WarnerMedia’s premium entertainment, sports, and news assets with Discovery’s leading nonfiction and international entertainment and sports businesses to create a single company. David Zaslav, president and CEO of Discovery was announced as the future CEO of the proposed new entity, named WarnerBros.Discovery.
AT&T houses brands like CNN, HBO, Cartoon Network, TBS, TNT, and the Warner Bros. studio. Discovery owns networks such as HGTV, Food Network, TLC, and Animal Planet. Warner Bros. Discovery will bring together leadership teams, content creators, and high-quality series and film libraries in the media business, while accelerating both companies’ plans for leading direct-to-consumer (DTC) streaming services for global consumers.
The new company will unite complementary and diverse content strengths with broad appeal — WarnerMedia’s robust studios and portfolio of iconic scripted entertainment, animation, news, and sports with Discovery’s global leadership in unscripted and international entertainment and sports.