WarnerMedia’s $43bn Merger with Discovery

By Isabelle Duerbeck and Tim Bamberger (King’s College London), Abilash Prabhakaran (MIT)


Overview of the deal

Acquirer: Discovery, Inc.

Target: WarnerMedia

Total Transaction Size: $43 billion

Closed date: Mid-2022

Acquirer advisor(s): Allen & Co. and JP Morgan Securities

Target advisor(s): LionTree, Goldman Sachs

AT&T (NASDAQ: T) has decided to spin off WarnerMedia and merge it with Discovery, Inc. (NASDAQ: DISCA), creating a total enterprise value of $132 billion and cementing the combined entity’s status as the world’s second-largest media company after Disney by annual revenue. As AT&T has faced increasing competition over streaming, especially against Disney and Netflix, the spinoff could create a more unified, competitive force and accelerate Discovery’s recent pivot towards streaming; yet, there will still be a huge effort in integrating the firms’ marketing and content. Regardless, this spinoff is part of AT&T’s recent, overall strategy in dumping assets and focusing on its core, telecom business. This is because AT&T had bought WarnerMedia for $85.4 billion three years ago and because AT&T had recently sold its cable business DirecTV for $16.25 billion to private equity firm TPG. Regardless, the combined entity will have at least 24.7 million subscribers across its streaming services and include assets, such as the HBO network, CNN, and Warner Bros. Overall, the combined entity will have 71% control by AT&T shareholders and 29% control by Discovery’s shareholders.

“That’s two teams that are best of class, that are leading in the industry. Our view is we just want them to keep doing what they are doing.” - David Zaslav, CEO (Discovery)

Company Details: (Acquirer - Discovery, Inc.)

Discovery, Inc. is an American media company that owns and operates a portfolio of brands, including Discovery Channel, Animal Planet, Science Channel, TLC, Scripps Network Interactive, Food Network, HGTV, and Travel Channel. Since 2020, the company has been focusing on and managing its streaming service Disney+.

Founded in 1985, headquartered in New York City, NY (USA)

CEO: David Zaslav

Number of employees: 9,800

Market Cap: $15.9B (as of 27/05/2021)

EV: $30.0B

LTM Revenue: $10.8B


LTM EV/Revenue: 2.78x


Company Details: (Target - Warner Media)

Warner Media is an international media company that was created in 1989 through the merger of Time Inc. and Warner Communications. Its portfolio comprises di