AT&T - Time Warner 220

WarnerMedia, whose media holdings include the WarnerMedia Podcast Network and The Roost Podcast Network, is about to get a new owner. AT&T has agreed to shed its WarnerMedia group and merge it with rival Discovery, bringing together two of the country’s largest media businesses.

The WarnerMedia Podcast Network was the ninth-biggest publisher in April according to Podtrac, which reported its 118 shows had a combined reach of 5.2 million unique U.S. listeners and more than 31 million downloads.

The Roost Podcast Network is part of Rooster Teeth, the WarnerMedia company targeting young adults. It says it has more than 10 million audio downloads a month in addition to the 280 million video views.

Under the all-stock transaction, structured as a Reverse Morris Trust, AT&T would receive $43 billion in a mix of cash, debt securities and WarnerMedia’s retention of certain debt. AT&T’s shareholders would receive stock representing 71% of the new company. Discovery shareholders would own a 29% stake in the new company.

The name of the new company, which will be run by Discovery CEO David Zaslav, has not been determined. It’s unclear what role WarnerMedia CEO Jason Kilar will play in the new organization.

The boards of both AT&T and Discovery have approved the merger which is expected to close in mid-2022. The deal, announced Monday, will also combine Warner Bros studios, HBO, CNN and other cable networks with Discovery’s reality-based cable channels such as Oprah Winfrey’s OWN, HGTV, The Food Network and Animal Planet.

“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” said AT&T CEO John Staneky. “It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want.”

The merger represents a retreat from the media business for AT&T, who three years ago merged with TimeWarner for $85 billion with grand plans of serving streaming video to its customers’ cellphones. “The spinoff indicates a failed acquisition strategy,” notes an account of the deal published by The New York Times.

The deal will create a colossus larger in scale than Netflix or NBCUniversal and second only to the Walt Disney Company. Cost cuts in the neighborhood of $3 billion are expected as part of the combination.