Waner and Discovery Suffer Blow to Pride in 49 Trillion Won Merger... Stock Price Plummets

AT&T Withdraws from Cable TV Industry
Aimed to Compete with Netflix but Stock Price Falls Instead

[Asia Economy New York=Correspondent Baek Jong-min] AT&T's subsidiary WarnerMedia and cable TV channel operator Discovery have agreed to merge and create a new company. Although AT&T decided to withdraw from the media business to focus on its core telecommunications role, the stock prices of the companies involved all plunged sharply.

According to CNBC, AT&T and Discovery officially announced on the 17th (local time) that they agreed to integrate their media content assets.

This deal will be carried out by AT&T spinning off WarnerMedia and merging it with Discovery.

AT&T will receive a total of $43 billion (about 49 trillion won) in cash and debt through this agreement. This is about half of the $85 billion (about 97 trillion won) paid when acquiring Time Warner.

AT&T is exiting the cable TV business just three years after acquiring Time Warner, the predecessor of WarnerMedia, in 2018. This is because it could not keep up with the market shift toward on-demand streaming.

WarnerMedia owns cable channels CNN, HBO, Cinemax, TNT, TBS, and the major Hollywood studio Warner Bros., while Discovery owns the cable channel of the same name along with Animal Planet, HGTV, and others.

WarnerMedia operates the streaming service HBO Max, and Discovery runs Discovery+, but both fall short of the leading companies Netflix and Disney+, which surpassed 100 million subscribers within about a year of its launch.

Bloomberg analyzed that this merger aims to create a business that can become a strong competitor to Netflix and Disney by combining AT&T’s media assets with Discovery, known as the 'reality TV empire.' The new company's content investment will be $20 billion, similar to Netflix’s level.

Despite attempts at transformation by these latecomers, the market was cold. On the day, AT&T’s stock price initially rose 4% at the opening but closed down 2.7%. Discovery also started with a 10% rise but plunged 5%. AT&T’s corporate bonds showed strength due to expectations of reduced debt burden.

Netflix, the strongest player in on-demand streaming, fell only 0.87%.