WarnerMedia-Discovery merger expected to close in Q2, says AT&T’s Stankey

The WarnerMedia-Discovery merger is on track to close in the second quarter, AT&T CEO John Stankey has told investors.

John Stankey

The company had said previously it expected the mega-merger to close at some point in the middle of 2022, but the emergence of several regulatory hurdles cast doubt on whether that timeline was achievable.

A key obstacle was cleared in late December as the European Commission granted the transaction unconditional antitrust clearance. The blockbuster deal has not yet received approval from the Department of Justice (DoJ) in the US, and in early December a group of more than 30 US Congress Democrats raised antitrust concerns, urging the DoJ to examine the merger carefully.

During AT&T’s Q4 call, Stankey told investors that the company has been “encouraged with how the process for the WarnerMedia deal is progressing.”

The transaction will see AT&T spin off WarnerMedia and combine it with Discovery, with AT&T receiving around US$43bn in a combination of cash, debt securities and WarnerMedia’s retention of certain debt. Meanwhile, AT&T shareholders will receive a 71% stake in the new company and Discovery shareholders will have the remaining 29%.

“Coming off an outstanding year with HBO Max growth, we expect to hand off the business with a strong exit velocity,” added Stankey.

AT&T also confirmed the previously released data that cablenet HBO and streamer HBO Max had reached a combined 73.8 million global subscribers by the end of 2021, an increase of 13.1 million from the previous year.

Of those subscribers, 46.8 million are in the US, a rise of 5.3 million from the year before.

WarnerMedia revenues in Q4 of 2021 were US$9.9bn, up by 15.4% from the year-ago quarter. Subscription revenues were up 5.4% to US$3.8bn, which WarnerMedia attributed to the growth of HBO Max. Content and other revenues were up 45% to US$4.4bn, driven by higher TV licensing and theatrical.