The merger of AT&T’s WarnerMedia and Discovery has gotten the go-ahead from U.S. regulators, the companies announced Wednesday, clearing a last major hurdle for the $43-billion deal that will created a new media and entertainment giant called Warner Bros. Discovery.
Regulators let the waiting period expire without objection, Deadline reports. It means Discovery execs might be a bit more forthcoming on at least some details of the merged company during a call following earnings scheduled for the morning of Feb. 24. Wall Street and Hollywood alike have been eager to learn the particulars of the combined entity’s structure and leadership but Discovery CEO David Zaslav legally has had to stay mostly mum until the deal closes.
AT&T CEO John Stankey had indicated on the telco’s recent earnings call with analysts that approval could be coming sooner than expected — but this is even faster than anticipated and a giant step forward to finally closing the deal. European regulators have already given it the thumbs up. Discovery shareholders still need to approve the transaction, but that’s considered in the bag with major stakeholders including John Malone and Advance/Newhouse already committed to a yes vote.
A lengthy proxy statement filed months ago with the SEC outlining the deal and relevant background, that’s been updated periodically with new information, needs to go active and set the date of the Discovery stockholder meeting with at least 20 days notice. AT&T holders don’t need to vote. AT&T then needs to detach WarnerMedia through a spinoff, the mechanics of which were announced Feb. 1. AT&T shareholders will receive almost one-fourth of a share in the new Warner Bros. for each AT&T share in hand. So a holder of four shares of AT&T, for example, would end up with about one share of Warner Bros. Discovery, and AT&T stockholders as a group will end up owning 71% of the new company. There could be some short-term volatility in Warner Bros. Discovery stock as they decide whether they want to hold it or sell it.
Then, the big close. Wall Street and Hollywood alike have been eager to learn the particulars of the combined entity’s structure and leadership but Discovery legally has had to stay mostly mum until the transaction is complete. Execs may be willing to lend a bit more color on a call following quarterly earnings scheduled for the morning of Feb. 24.
Regulatory roadblocks weren’t anticipated but couldn’t be entirely discounted given the new, tougher stance of President Joe Biden’s DOJ.
As per Discovery’s SEC filing this morning, as of Feb. 9, “Discovery, Inc. and AT&T Inc. have satisfied the closing condition in Section 9.1(d)(i)of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of May 17, 2021, by and among Discovery, AT&T, DrakeSubsidiary, Inc. and Magallanes, Inc. (“Spinco”) relating to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”).”
“The HSR Act statutory waiting period has expired or otherwise been terminated, and any agreement not to consummate the transaction between the parties and the Federal Trade Commission or the Antitrust Division of the United States Department of Justice or any other applicable governmental entity, has also expired or otherwise been terminated,” it said.
AT&T announced plans to spin off WarnerMedia last May, The combination, which will result in a media powerhouse led by Discovery CEO David Zaslav, sparked a flurry of consolidation and industry M&A speculation. The combined company will house two streaming services in Discovery+ and HBO Max, a storied film studio and suite of cable networks, sports, entertainment and news assets including the recently embattled CNN.
Zaslav will run the company and Discovery CFO Gunnar Wiedenfuls, his CFO, will retain that position. That’s about all that’s know officially — except that Jeff Zucker’s will not have a role. He resigned as head of CNN last week for not disclosing a relationship with a fellow employee. Zucker’s exit was related to a CNN probe of fired host Chris Cuomo and it got messier as subsequent reports also linked him with former New York Gov, Andrew Cuomo.
Zucker’s ouster has demoralized the news network, especially as Discovery’s biggest shareholder John Malone has been a critic of the network.
Zucker’s exit was linked to a CNN probe of fired host Chris Cuomo and subsequent reports linked him with former New York Gov, Andrew Cuomo.
One of Discovery’s biggest shareholders, John Malone, has been a vocal critic of CNN.
The new company’s board of directors will consist of 13 members, seven initially appointed by AT&T, including the chair. Discovery will initially appoint six members, including Zaslav and Malone.