The AT&T logo outside of AT&T corporate headquarters on March 13, 2020 in Dallas, Texas.
Ronald Martinez | Getty Images News | Getty Images
US telecommunications giant AT&T announced a deal on Monday combining its content unit WarnerMedia with Discovery to pave the way for one of Hollywood’s largest studios to compete with rival media giants Netflix and Disney.
According to reports over the weekend, the companies were in advanced talks to complete the merger.
If approved by regulators, it will effectively reverse AT & T’s longstanding plan to combine content and distribution into one vertically integrated company.
The deal is expected to create a new business separate from AT&T that could be worth up to $ 150 billion including debt, according to The Financial Times.
The shares of US media company Discovery rose 12.8% in pre-market trading, while AT & T’s share price rose around 3%.
AT&T owns CNN, HBO, and Warner Bros. after acquiring Time Warner, since renamed WarnerMedia, for $ 109 billion in 2018. Discovery channels include Animal Planet and the Discovery Channel.
According to reports, WarnerMedia’s HBO and HBO Max have around 64 million subscribers worldwide. Discovery announced last month that it had reached 15 million paying subscribers.
In contrast, Netflix currently has around 208 million subscribers worldwide, while Disney + recently topped 100 million less than a year and a half after the streaming service launched.
– CNBC’s Alex Sherman contributed to this report.