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AT&T to merge WarnerMedia division with Discovery: Deal will create new streaming giant

Telecoms conglomerate AT&T has entered into an agreement to merge its WarnerMedia business with Discovery. The combined enterprise value would total around $150bn. AT&T shareholders will own 71% of the business, with Discovery owning the remainder. The merger will bring together one of the largest movie studios in Hollywood and Discovery’s channels, placing them both under the same ownership. It also marks the entry of a strong player in the streaming market.

WarnerMedia and Discovery have very different content offerings, which when combined would make for a very competitive streaming service. The tie-up would combine WarnerMedia’s strong movie offering, which includes the Harry Potter and Batman franchises, with Discovery’s portfolio, which includes Animal Planet and the Discovery Channel. AT&T CEO John Stankey stated that the merger would unite “two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms.

The global streaming market is already crowded, with Netflix and Disney+ being dominant across the world. Netflix currently has around 208 million subscribers, while Disney+ has over 100 million. As many countries around the world enforced home lockdown measures amid the COVID-19 pandemic, both streaming services saw subscriber numbers surge. However, both platforms have since seen a significant slowdown in subscriber numbers. The slowing of subscriber numbers for both of these dominant streaming services suggests that demand is saturating for both of these platforms. As such, the entry of a new player with a vast content library has the potential to be very well received.