YOU ARE AT:BusinessAT&T opts for spin-off to combine WarnerMedia with Discovery

AT&T opts for spin-off to combine WarnerMedia with Discovery

AT&T has confirmed that the mechanism for its separation of WarnerMedia will be a spin-off, followed by the subsequent combination of WarnerMedia with Discovery.

The transaction itself was announced in May of last year, but the mechanism — a stock split or a spin-off — had not been confirmed, and on the company’s most recent quarterly call, analysts were keen to know which it would be. AT&T will receive $43 billion in a combination of cash and other considerations; the transaction is expected to close in the second quarter of 2022.

AT&T shareholders will receive stock representing about 71% of the new company and existing Discovery shareholders will hold about 29% of it.

After the close of the transaction, the WarnerMedia-Discovery stock is expected to trade under the symbol WBD.

“In evaluating the form of distribution, we were guided by one objective — executing the transaction in the most seamless manner possible to support long-term value generation,” said AT&T CEO John Stankey in a statement. “We are confident the spin-off achieves that objective because it’s simple, efficient and results in AT&T shareholders owning shares of both companies, each of which will have the ability to drive better returns in a manner consistent with their respective market opportunities. … We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent.”

The spin-off of WarnedMedia and the accompanying influx of cash to AT&T will come just about the time that the company is eyeing a mid-year ramp-up of midband spectrum deployment for 5G. It also plays into the company’s overall strategy to become a “more focused business” in 2022, which Stankey has spoken about previously at a Citi conference.

AT&T’s focus, Stankey said, is “to be a great connectivity company” and move its media assets into a stronger position to “truly become a global media distribution asset. … It’s going to be a great unlock and a great opportunity for shareholders of this company as we move through this year.”

He added later, “We’re going to be a more focused business,” saying that AT&T is working on making sure its remaining assets as “sized and structured appropriately.”

ABOUT AUTHOR

Kelly Hill
Kelly Hill
Kelly reports on network test and measurement, as well as the use of big data and analytics. She first covered the wireless industry for RCR Wireless News in 2005, focusing on carriers and mobile virtual network operators, then took a few years’ hiatus and returned to RCR Wireless News to write about heterogeneous networks and network infrastructure. Kelly is an Ohio native with a masters degree in journalism from the University of California, Berkeley, where she focused on science writing and multimedia. She has written for the San Francisco Chronicle, The Oregonian and The Canton Repository. Follow her on Twitter: @khillrcr