AT&T and Discovery Communications have confirmed media reports that the companies will merge AT&T’s WarnerMedia assets with Discovery’s platform for the creation of a standalone global entertainment company.

The merger is defined by the companies as an all-stock, Reverse Morris Trust transaction, with AT&T receiving $43 billion in a mix of cash, debt securities, and WarnerMedia’s retention of certain debt while the company’s shareholders retain 71% of the stock in the new company, which has not yet formally named. Discovery shareholders would own 29% of the new company, although Discovery CEO David Zaslav will be at the helm of the new entity.

The new company’s 13-person board of directors will include seven members appointed by AT&T, including the chairperson of the board, and six appointed by Discovery, including Zaslav.

The companies added the new entity would house nearly 200,000 hours of programming and more than 100 brands spanning the cinema, streaming, publishing, music, news, and sports industries. AT&T owns CNN, HBO, Cartoon Network, TBS, TNT, and the Warner Bros. studio, among other assets, while Discovery’s holdings include the HGTV, Food Network, TLC, and Animal Planet operations.

The new entity, the companies stated, will have a projected 2023 revenue of approximately $52 billion, adjusted EBITDA of approximately $14 billion, and a free cash flow conversion rate of approximately 60%.

“It is super-exciting to combine such historic brands, world-class journalism, and iconic franchises under one roof and unlock so much value and opportunity,” said Zaslav. “With a library of cherished IP, dynamite management teams, and global expertise in every market in the world, we believe everyone wins.”

The announcement marks a dramatic shift in focus for AT&T. Less than three years ago, the company successfully fought against the U.S. Department of Justice to uphold its acquisition of Time Warner Media.

In moving its entertainment and information assets into a new venture, AT&T will no longer be a direct participant in the rapidly growing streaming service market, where its HBO Max platform is trailing Netflix and Walt Disney’s Disney+ for consumer attention.

Indeed, AT&T’s John Stankey highlighted this merger would enable his company to pursue other lucrative revenue streams beyond the hunt for viewing audiences.

“For AT&T shareholders, this is an opportunity to unlock value and be one of the best-capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity,” he said. “AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend, plus they will get a stake in the new company, a global media leader that can build one of the top streaming platforms in the world.”

News of the merger percolated over the weekend before its official announcement ahead of Monday trading. Discovery shares spiked by 17% in premarket trading, while AT&T shares saw a somewhat less dramatic 4.9% uptick.

This story originally appeared on Benzinga. © 2021 Benzinga.com.

Benzinga does not provide investment advice. All rights reserved.

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