Analyst Note| Neil Macker, CFA |
Discovery and AT&T announced on May 17 that Discovery and AT&T’s WarnerMedia will merge to form a large standalone media company. The new firm (which was not named) will have tremendous reach via the combined networks, including TNT, CNN, Discovery, and HGTV, along with a massive content library of some of the best known scripted and unscripted programming. We are relatively confident that the deal will be approved by regulators and close in 2022 since it removes one vertically integrated player from the market and the overall merger size is smaller than the 2019 Disney/Fox acquisition that largely sailed through albeit under the Trump administration. We expect the Discovery shareholder vote will be largely painless as the two major holders with almost 50% voting control agreed to support the deal.