AT&T is merging its entertainment brands with Discovery's to create a new streaming service that will take on Netflix and Disney, putting CNN under the same roof as HGN and HBO Max.
The $43billion deal was announced on Monday. Discovery CEO David Zaslav will serve as CEO of the new company, which has a name but which hasn't been announced.
The Financial Times cited sources on Monday saying the proposed name is Warner Discovery.
It's unclear how much the new service will cost monthly, and where it'll be available when it launches next year.
Discovery CEO Zaslav and AT&T CEO John Stankey told CNN on Monday they hadn't decided yet if they'll continue to offer the channels as individuals, that can be bundled for a higher price, or if they'll only be available as a standalone service that means paying one amount for a large combination of channels and shows.
AT&T shareholders will own 71% of the new company; Discovery shareholders would own 29% of the new company. The boards of directors of both AT&T and Discovery have approved the transaction.
The deal announced Monday would create a separate media company housing all of the Warner and Discovery networks. Warner's CNN is part of the deal, along with HBO Max, TLC and TNT.
The deal aims to create a behemoth that has the horsepower to take on Netflix and Disney in the streaming service race, combining a stable of news and entertainment shows.
Zaslav announced on Monday that in the first year, the new company will invest $20billion in content - $3billion more than Netflix did last year.
This is how the streaming services currently stack up. Netflix has by far the biggest number of subscribers and it spends the most but the new Discovery and AT&T company will spend more
WarnerMedia brands including CVNN, HBOMax, TNT and HLN will be part of the deal and will go onto the new streaming service that is being launched by Discovery next year. The new service has a name but Discovery hasn't announced it yet
Discovery's TV brands that will also be housed under the new company when the deal is complete next year
Discovery CEO David Zaslav said on Monday that the new streaming service will prioritize news, like CNN. CNN President Jeff Zucker was due to leave at the end of the year but Zaslav said on Monday: 'We will be trying to figure out how do we get the best and brightest to stay'.
This is how the major streaming services stack up. Netflix and Amazon Prime are the clear industry leaders but Disney and others, including Discovery, continue to invest in content
Netflix has 207million monthly subscribers and Amazon has 200million. Combining HBO Max and Discovery makes a total of 32million, still considerably less, but the goal is to acquire more as they invest in new content. Disney+ has 103million monthly subscribers.
News of the deal sent Discovery's share prices soaring by nearly 10 percent on Monday morning. AT&T's rose by 2 percent after opening bell.
'It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity,' Zaslav said, adding that the two companies' assets are 'better and more valuable together.'
In the all-stock deal, AT&T will receive $43 billion in a combination of cash, debt securities, and WarnerMedia´s retention of certain debt.
AT&T shareholders will receive stock representing 71% of the new company and Discovery stockholders will own 29% of the new company.
AT&T's share price rose by 2 percent on Monday morning
Discovery's share price jumped by nearly 10 percent on Monday after the opening bell
Time Warner: Putting together and taking apart a company
1990: Time Warner founded by merging Warner, the film company incorporated in 1923, which included stars Humphrey Bogart, Bette Davis and Errol Flynn, with Time, the publisher founded in 1923 and behind Time Magazine and Sports Illustrated
1995: Time Warner agrees to buy Turner Broadcasting System for $9.6 billion. Turner owns CNN and TBS
1996: Road Runner, first high-speed internet delivered by cable, launched
2000: America Online merges with Time Warner in $106 billion deal
2002: AOL Time Warner reports largest ever quarterly loss for a U.S. company at the time, $54.24 billion
2003: Company changes its name back to Time Warner Inc.
2003: Time Warner sells Warner Music division for $2.6 billion
2009: Time Warner splits off AOL as a separate company
2013: Time Warner spins off Time Inc. as separate publishing company
2015: Charter Communications buys Time Warner Cable for $64.6 billion
2016: AT&T agrees to buy Time Warner for around $85.4 billion, a deal that goes through in 2018
2018: Time Warner renamed WarnerMedia under AT&T ownership
2021: AT&T announces plans to separate out Warner Media brands and merge them with Discovery, creating a $150 billion company
Sources: Britannica, Zippia
AT&T had pushed into the streaming sector through HBO Max, a direct competitor to Netflix, Apple, Disney and Comcast.
Discovery launched a standalone streaming service called Discovery Plus this year.
The deal to give up its media business marks a major shift by AT&T, which fought hard to push a transaction through in 2018 to buy Time Warner for $85.4 billion with the Justice Department trying to block the deal on anti-competitive reasons.
The deal is expected to close by the middle of next year.
'This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms.
'It will support the fantastic growth and international launch of HBO Max with Discovery's global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want,' AT&T CEO John Stankey said in a statement.
Zaslav said on Monday morning that the new service would focus heavily on news and that he expects the average consumer to have multiple streaming services. 'I think people will have three or four.'
CNN President Jeff Zucker is due to leave the network at the end of the year but Zaslav hinted on Monday he'll try to keep him on.
'We will be trying to figure out how do we get the best and brightest to stay'.
NBCUniversal had been in the running to acquire WarnerMedia.
Now, it's unclear how Comcast, which owns NBCUniversal, will beef up its streaming services to compete.
Earlier this year, Disney launched Disney+, which combines all of Disney's movies with Hulu content.
It has spent billions on new shows, including on Meghan Markle's elephants program.
Apple TV+ has also increased its investment, buying shows like Oprah Winfrey's mental health series that she has made with Prince Harry.
Netflix has a deal in place with Harry and Meghan, too, as it does with Barack and Michelle Obama.
STREAMING SERVICE BREAKDOWN
Here's a look at the new streaming challengers and what you get with each:
Discovery's merger with AT&T's WarnerMedia
There is no name yet for the new service that will be launched next year when the deal is complete.
It's unclear how much it'll cost a month and where it'll be available first.
The new service will combine WarnerMedia's news and entertainment brands like HBO Max and CNN with Discovery's reality TV empire.
Discovery already has its own streaming service - Discovery+.
That has all of Discovery's lifestyle brands along with HGTV and international sports rights. It owns Eurosport, the European sports TV network and the GolfTV streaming network.
Disney's entertainment service, featuring shows and movies from Disney, Pixar, Marvel, Star Wars and National Geographic.
Price: $7 a month or $70 a year. Getting Disney Plus with ESPN Plus and Hulu, both owned by Disney, will cost $13 a month.
Promotions: Seven-day free trial. Free year with all Verizon Wireless unlimited plans and when customers switch to Verizon's Fios Home Internet or 5G Home Internet.
Original shows: 'The Mandalorian,' a live-action 'Star Wars' series created by Jon Favreau. A prequel to the 'Star Wars' movie 'Rogue One.' A series about the Marvel character Loki. A rebooted 'High School Musical' series. A documentary series focused on Disney.
Other shows and movies: Animated classics, including 'Aladdin' and 'The Jungle Book,' will be available at launch; others will be added as streaming deals with other services expire. Movies released in 2019 or later will go to Disney Plus rather than a rival streaming service first. Disney Plus will also house past seasons of 'The Simpsons,' which Disney got through its purchase of Fox's entertainment business.
Apple's entry into the streaming business.
Price: $5 a month
Promotions: Seven-day free trial. A year free to buyers of a new iPhone, iPad, Apple TV, iPod Touch or Mac.
Original shows: A Jason Momoa series called 'See' and 'The Morning Show,' a comedy starring Jennifer Aniston, Reese Witherspoon and Steve Carrell. The service will launch with nine original shows and movies, with more expected each month.
Other shows and movies: None.
The service from Comcast's NBCUniversal will carry 15,000 hours of video at launch.
Promotions: Free for many Comcast cable and internet customers.
Original shows: Reboots of 'Battlestar Galactica' and 'Saved by the Bell.' Comedy series 'Rutherford Falls,' from Michael Schur, creator of 'The Good Place' and 'Parks and Recreation.'
Other shows and movies: '30 Rock, 'Will & Grace,' and 'Cheers,' though these won't stream exclusively on Peacock. Peacock will get 'Parks and Recreation' and 'The Office' once existing deals with Netflix expire. 'Bridesmaids,' ''E.T.' and other movies from Universal Pictures, Focus Features and DreamWorks Animation.
Price: Netflix's most basic plan is $8.99 per month, its Standard plan with HD quality - the company's most popular offering - is $12.99 per month and the Premium plan is $15.99 per month.
Original Shows: Netflix features more than 1,000 original offerings, including Stranger Things, The Crown, Orange Is The New Black, Bojack Horseman and GLOW.
Launch date: March 2008
Price: Hulu offers four levels of service: Basic ($5.99 per month), Premium ($11.99 per month), Basic + Live TV ($44.99 per month), and Premium + Live TV ($50.99 per month). Basic has ads, while Premium is ad-free.
Original shows: Hulu offers significantly fewer originals than its competitor Netflix, with 26. Popular series include The Handmaid's Tale, Castle Rock, PEN15 and The Act.
Price: Amazon Video is available to all Amazon Prime members. The Prime membership is $12.99 per month or $119 per year.
Original shows: Amazon has 39 original shows, including The Man in the High Castle, Bosch, Mozart in the Jungle, Patriot, Sneaky Pete and The Marvelous Mrs. Maisel