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Discovery Inc DISCA

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Discovery and WarnerMedia Merge to Form New Media Powerhouse; Raising Fair Value Estimate to $42

Neil Macker, CFA Senior Equity Analyst

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.

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Company Profile

Business Description

Discovery is the one of the largest global media providers with over 2 billion cumulative subscribers in over 220 countries. Its three traditional networks (Discovery, TLC, and Animal Planet) each reach over 84 million U.S. households and more than 200 million international subscribers. The top two networks (HGTV and Food Network) acquired in the Scripps transaction are available in more than 87 million households in the U.S. The international segment consists of national and pan-regional networks over 294 unique distribution feeds in 50 languages.

Contact
8403 Colesville Road
Silver Spring, MD, 20910
T +1 240 662-2000
Sector Communication Services
Industry Entertainment
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 9,800

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