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AT&T Is Preparing to Merge Media Assets With Discovery

"The idea is to combine Discovery's reality-TV empire with AT&T's vast media holdings, building a business that would be a formidable competitor to Netflix Inc. and Walt Disney Co. Any deal would mark a major shift in AT&T's strategy after years of working to assemble telecommunications and media assets under one roof. AT&T gained some of the biggest brands in entertainment through its acquisition of Time Warner Inc., which was completed in 2018."

So, spin off Video to TPG so AT&T doesn't have to deal with Premium TV and now potentially spin off WarnerMedia to Discovery+ (or a new company combining both) so AT&T does not have to deal with content streaming? Keep an investment in each new company so they don't lose all the profit but get out of the day to day management of the product offerings. It sounds like Elliott Management Corp (the activist investor group that pushed to sell DIRECTV) is getting it's wish to further divest AT&T's most recent acquisitions.
 

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A lot depends on how long their arms are when they move to arms length agreements. Right now under common control it seems easier to make the deal that ATTWS would get access to HBO/TimeWarner content. But if the media is spun off they will need to deal with the new controlling ownership. Some existing deals may carry over, but if they are transferring control the new owner will want to be able to make their own decisions to protect the profitability of the spin off.

Special deals for HBOMax on what will become new DIRECTV may also be affected once the spin off is complete. Again, deals can carry over but the new controlling owner will want to make the decisions that are best for the spin off.
 

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Majority ownership retains AT&T some level of control. Management does what they feel they need to do but they still have to answer to the Board and the Board has to answer to the stockholders.
For the DIRECTV spinoff the board isn't AT&T. AT&T's control of the board is limited to appointing two members (40%). That is all. Their ownership is an investment ... not a purchase of control.
If WarnerMedia is spun off under a similar arrangement expect the deal to be similar. Selling control but keeping preferred/common shares as an investment.
 

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Telecom giant AT&T announced Monday a deal to combine its content unit WarnerMedia with Discovery, paving the way for one of Hollywood's biggest studios to compete with media giants Netflix and Disney.

Under the agreement, AT&T will unwind its $85 billion acquisition of Time Warner, which closed just under three years ago and form a new media company with Discovery. The deal would 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.

AT&T said it would receive an aggregate amount of $43 billion in a combination of cash, debt and WarnerMedia's retention of certain debt. AT&T shareholders would receive stock representing 71% of the new company, while Discovery shareholders would own 29%, it added.
 

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Majority ownership retains AT&T some level of control. Management does what they feel they need to do but they still have to answer to the Board and the Board has to answer to the stockholders.
Reading the agreement would be helpful. The WarnerMedia Discovery merger is a stock deal. The stockholders in the new combined company will be comprised of the stockholders of AT&T and Discovery. AT&T stockholders will get 71% ownership of the merged company and then said company will operate separately from AT&T. AT&T gets a boat load of money ($43 billion) including transfer of WarnerMedia debt to the new company.

Or as the press release put it: "combine WarnerMedia's premium entertainment, sports and news assets with Discovery's leading nonfiction and international entertainment and sports businesses to create a premier, standalone global entertainment company."
 

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The deal was filed with the SEC (33 pages). TLDR: That is what press releases are for ...

"Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T would receive $43 billion (subject to adjustment) in a combination of cash, debt securities, and WarnerMedia's retention of certain debt, and AT&T's shareholders would receive stock representing 71% of the new company; Discovery shareholders would own 29% of the new company. The Boards of Directors of both AT&T and Discovery have approved the transaction."

One correction to my previous post - The $43 billion includes the debt transferred.
 

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The reasoning is that content carriage should not be made more difficult (i.e. cost more or have unreasonable conditions imposed) just because you're a competitor in other industries (i.e. the broadband space).

If broadband companies weren't allowed to own content, I suspect that there would be a lot less fuss all the way around.
The "problem" seems to be more of a threat that is perceived by people with a chicken little attitude than a reality.

AT&T could make it more difficult for their subscribers to access Peacock's servers to try to hurt Comcast ... but they are getting out of the content business so they will no longer be competing content company to content company. Except for zero rating data (charging data for using Peacock but not their service) it is in AT&T's best interest not to play silly games blocking or throttling other company's content.

Comcast has made it easier to get Peacock via Xfinity (discounted service and one free streaming box for each broadband subscriber) but they have not locked Peacock streaming content to "Xfinity only" or imposed any unreasonable conditions.

"Unreasonable conditions" seem to be more of a fear than reality.
 

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Nah. DISH never lost Warner's basic cable Turner nets, so why would they lose the Discovery nets? Also, DISH has been testing HBO and Cinemax channels recently on their sats, so it looks like they may finally soon return after being gone over two years.
Exactly. It appears that HBO is returning to DISH. One shouldn't use the WarnerMedia/Discovery deal to speculate that channels will be lost.
 

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But it's been gone so long, the damage has already been done.

Anyone wanting HBO, either subscribes to HBO streaming service or has switched providers.

I don't see HBO offering Dish a lower price to come back, and I don't see Charlie paying a higher price considering what I just said.
And yet several HBO/Cinemax channels were uplinked for testing on May 12th.
4 HBO channels and 2 Cinemax channels via Satellite - 3 more linear HBO/Cinemax channels via linear streaming integrated in the guide (all 9 in HD).
DISH will also have all 9 channels in SD via linear streaming integrated in the guide (good for rain fade backup).

No, unless additional channels are uplinked it won't be the same packages that were removed 11/1/2018, but the signs are positive for a return.
The issue in 2018 was not the price HBO requested it was the minimum number of subscribers HBO wanted DISH to provide.
Remove that sticking point and Mr Ergen could be paying the same price as HBO requested in 2018.

In any case, the eventual merger of WarnerMedia and Discovery will not immediately change each company's contracts with DISH. There is no reason to sow fear, uncertainty and doubt over the continuance of Discovery channels on DISH.
 

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Are HBO Max streaming subscribers split out separately from HBO MVPD subscribers?

I receive HBO Max as part of my DISH subscription ... I generally watch the content via the channels on DISH (which are not the complete linear lineup). DIRECTV subscribers also receive HBO Max as part of their subscription to the linear satellite channels. They may or may not ever touch the streaming content. HBO Max has been bundled with linear on other MVPDs as well.

If HBO Max is stripped of content (requiring a subscription to the new Time Warner Discovery streaming service) I may not notice (since I have streamed little content separate from the OnDemand library available via the DISH receiver). I have gone directly to HBO Max's service for some content. For subscribers like me, we may never notice any change in HBO Max as long as the major content stays (currently linear movies and produced for HBO content). Losing content I did not know I had access to is not a loss.
 

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Would you notice if the price goes up because they added content you don't necessarily want (Discovery+)?
I expect the via MVPD price to remain the same. Perhaps a minor adjustment but not a huge jump that includes additional content.
 
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