May 18, 2021: -On Monday, U.S. telecom giant AT&T announced a deal combining its content unit WarnerMedia with Discovery, paving the way for one of the biggest studios of Hollywood to compete with rivals like media giants Netflix and Disney.

Under the agreement, it would receive an aggregate amount of nearly $43 billion in a combination of cash, debt, and WarnerMedia’s retention of unavoidable debt, said AT&T. The shareholders would receive stock representing 71% of the new company; meanwhile, Discovery shareholders would own 29%, AT&T added.

If regulators approved, the deal effectively reverses AT&T’s plan to combine content and distribution in a vertically integrated company.

According to The Financial Times, the deal would create a new business that could be valued at $150 billion, separate from AT&T, which includes debt.

Shares of U.S. media company Discovery were 27% higher in premarket trading, while AT&T’s stock price was up more than 4%.

“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” AT&T CEO John Stankey said.

AT&T said Discovery President and CEO David Zaslav would lead the new company. The board would consist of 13 members, seven initially appointed by AT&T, including the chair, and Discovery would appoint six members, including Zaslav.

“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,” Zaslav said, adding that AT&T and Discovery’s assets “are better and more valuable; together.”

The new firm’s singular mission, Zaslav said, is “to focus on telling the most amazing stories and have a ton of fun doing it.”

AT&T owns CNN, HBO, and Warner Bros. after it acquired Time Warner since renamed to WarnerMedia, for $109 billion in 2018. Discovery’s channels include Animal Planet and the Discovery Channel.

HBO and HBO Max reportedly have around 64 million subscribers worldwide. Discovery said last month it had reached 15 million paying subscribers.

By contrast, Netflix has around 208 million global subscribers, while Disney+ recently surpassed 100 million less than 1½ years after the streaming service launched.

The announcement came after reports over the weekend that the companies were in advanced talks to complete the merger.