AT&T to Combine WarnerMedia Assets With Discovery
700px) 660px, (max-width:&860px) 820px, 1260px” src=” https://images.wsj.net/im-339329?width=620&size=1.5″ data-enlarge = ” https://images.wsj.net/im-339329?width=1260&size=1.5″ alt=”” title=” The CNN Center building in Atlanta. The news channel is among WarnerMedia’s cable assets.”/ >< figcaption class=" wsj-article-caption short article __ inset __ image __ caption" itemprop=" caption" > The CNN Center building in Atlanta. The news channel is one of WarnerMedia’s cable television assets.< period class =" wsj-article-credit short article __ inset __ image __ caption __ credit "itemprop=" developer "> Picture: erik s lesser/Shutterstock By. Drew FitzGerald Close Drew FitzGerald Updated May 17, 2021 7:48 am ET AT&T Inc. T 0.09% and Discovery Inc. DISCB -1.14% reached an offer to combine their media properties into a brand-new publicly traded company, relaxing the telecom business’s big bet on entertainment after less than 3 years. The new company, which&isn’t yet called, will be led by existing Discovery Chief David Zaslav. The companies said AT&T’s Jason Kilar will keep his title as WarnerMedia CEO. AT&T investors will hold a 71% stake in the new entity, while Discovery shareholders own a 29% stake.
In exchange, AT&T said it would receive $43 billion of cash, financial obligation securities and WarnerMedia’s retention of particular debt.
AT&T likewise said it would adjust its dividend policy to show the structure of the new media company. The company said it expects a yearly dividend payout ratio of 40% to 43% from more than $20 billion of anticipated totally free cash flow.
The Dallas business invested about $15 billion in 2015 on the shareholder payments, which lots of private investors have long valued as a stable source of income.
AT&T reported $169 billion of net debt at the end of March, a level that has troubled some financiers stressed over the corporation’s monetary versatility.
WarnerMedia owns cable television channels such as HBO, CNN, TNT and TBS as well as the Warner Bros. tv and film studio. Discovery has a portfolio that includes its namesake network and HGTV.
The tie-up is an unexpected U-turn by AT&T, which positioned an enormous bet on media with its 2018 acquisition of Time Warner Inc. for around $81 billion. That offer made it the world’s most indebted nonfinancial company.
The companies said they expect to close the deal in mid-2022.
Write to Drew FitzGerald at [email protected]!.?.! Copyright © 2020 Dow Jones & Company, Inc.
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