Coming full circle: AT&T agrees WarnerMedia spin-off deal with Discovery

AT&T and Discovery Inc have announced a deal in which WarnerMedia will be spun off and merged with Discovery’s full content and distribution assets to create a new company. It is proposed that the company will have an ownership structure split of 71% and 29% between current AT&T and Discovery shareholders respectively. Pending regulatory approval, AT&T will receive $43 billion and relinquish executive management control.

While the deal marks a strategic shift for AT&T three years after buying Time Warner, it is unsurprising given the investment levels in original content now needed to run successful global streaming platforms – on top of those for building 5G and fibre networks. This does not sound a death knell for telcos in media though; rather, it reflects the challenges in attempting full vertical integration compared to licensing and bundling.