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WarnerMedia Merges With Discovery in $43 Billion Deal

WarnerMedia and Discovery announced a bold move in the ongoing streaming wars that sees the two companies merging in a $43 billion that cedes majority control to Warner’s parent company AT&T.

The resulting media conglomerate will act as a new, standalone company to be led by Discovery’s president and CEO David Zaslav. The agreement will see AT&T receiving the full purchase price and a 71% stake in the new entity, while Discovery will own the remaining 29%.

The reason for the tactical merger is rooted in the intense competition for supremacy in the streaming video space, in which both Warner and Discovery are running their own horses in the race. Warner’s HBOMax was launched less than a year ago, and Discovery booted up its discovery+ service early in 2021, but they are playing catchup against Amazon Prime, Netflix and Disney+.

The merged entity will combine multiple media units, including WarnerMedia’s Warner Bros. Animation and Cartoon Network, while Discovery brings its popular Food Network and HGTV to the race. The combined content library is said to include close to 200,000 hours of programming, with more than 100 different programs.

In an investor call this week, Discovery predicted the merged company will generate $52 billion by 2023, and will also enjoy some lower costs due to synergies between the companies, as there is an estimated $3 billion in direct overlap between Warner and Discovery. The companies said in a joint release that these savings will be reinvested in new content, digital innovation, and the continued growth of their respective streaming services. Currently, the two organizations spend roughly $20 billion on film and television content annually.

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