Amid recent antitrust controversy, Dallas-based AT&T plans to close a deal to merge WarnerMedia and Discovery by the second quarter of 2022.
In December of 2021, members of Congress sent a letter to the U.S. Department of Justice that urged them to investigate whether the merger would lead to less diversity in media.
“This transaction raises significant antitrust concerns,” wrote the 30 Congress members who signed the letter. “In particular, the merger threatens to enhance the market power of the combined firm and substantially lessen competition in the media and entertainment industry, harming both consumers and workers.”
AT&T announced its intention to merge the two companies in May 2021. The company would receive $43 billion as compensation for WarnerMedia. The move would give shareholders 71% of the newly formed company’s stock, with Discovery shareholders owning the rest. The new company will be known as “Warner Bros. Discovery.”
The deal will unite brands like HBO, HGTV, Warner Bros., Food Network, Cartoon Network, DC Comics, and more in a move that creates a media juggernaut to compete against Netflix and Disney. According to their last reports, Netflix sits at 222 million subscribers, Disney+ sits at 118 million, and Amazon Prime sits at 170 million.
“Our focus is going to be to get to 200 million to 300 million subscribers,” said David Zaslav, who is CEO of Discovery Inc. HBO Max, owned by WarnerMedia. That platform has 74 million subscribers.
In 2016, AT&T faced antitrust scrutiny when first announcing that it would purchase what is now WarnerMedia. The company sidestepped the challenge by the Justice Department in 2018 when it offloaded the companies after integrating them into one.
According to WarnerMedia’s fourth-quarter revenue report, the company earned $9.9 billion, a 15% increase from the same period in 2020.
John Stankey, the CEO of AT&T, said he was “encouraged with how the process for the WarnerMedia deal is progressing.”