The logo of AT&T outside of AT&T corporate headquarters on March 13, 2020 in Dallas, Texas.
Ronald Martinez | Getty Images News | Getty Images
U.S. telecoms giant AT&T on Monday announced a deal combining its content unit WarnerMedia with Discovery, paving the way for one of Hollywood’s biggest studios to compete with the likes of rival media giants Netflix and Disney.
It comes after reports over the weekend that the companies were in advanced talks to complete the merger.
If approved by regulators, the deal effectively reverses AT&T’s years-long plan to combine content and distribution in a vertically integrated company.
The deal is expected to create a new business, separate from AT&T, that could be valued at as much as $150 billion including debt, according to The Financial Times.
Shares of U.S. media company Discovery were seen 12.8% higher in pre-market trading, while AT&T’s stock price was up around 3%.
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.
WarnerMedia-owned 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 currently has around 208 million global subscribers, while Disney+ recently surpassed 100 million less than a year-and-a-half after the streaming service launched.
— CNBC’s Alex Sherman contributed to this report.