February 2, 2022: -AT&T said on Tuesday it would spin off WarnerMedia in a $43 billion transaction to merge its media properties with Discovery.

The U.S. telecoms group will distribute the new Warner Bros. Discovery shares as a dividend of $1.11 per share, down from $2.08 per share.

AT&T shareholders will 71% of the new Warner Bros. Discovery company and will receive 0.24 shares of Warner Bros. Discovery for AT&T share they own.

“Rather than try to account for market volatility in the near-term and decide where to apportion value in the process of doing an exchange of shares, the spin-off distribution will let the market do what markets do best,” AT&T CEO John Stankey said in a prepared statement.

“We are confident more equities will soon be valued on the solid fundamentals and attractive prospects they represent.”

AT&T anticipates spending $20 billion in CAPEX this year to invest more heavily into fiber to the home broadband internet services and expand its 5G wireless footprint.

Warner Bros Discovery will play catch up to larger streaming video rival Netflix even though WarnerMedia’s HBO Max grew faster in the United States in the fourth quarter, which ends the year with 74 million subscribers.

But the combination, which is expected to close in the second quarter, will be coming together just as Netflix shows signs of maturity.