Warner Bros. Discovery

On May 16, 2021, Bloomberg News reported that AT&T was in talks with Discovery, Inc. for it to merge with WarnerMedia, the parent company of Warner Bros., to form a publicly-traded company that would be divided between its shareholders.[5][6]

On May 17, 2021, AT&T announced that it had agreed to divest its equity stake in WarnerMedia (the former Time Warner, which AT&T acquired in 2018 for just over US$85 billion in an attempt to become a vertically integrated media conglomerate) to its shareholders, and then merge it with Discovery Inc. to form a new publicly-traded company. The merger, scheduled to be completed in mid-2022, would be structured as a Reverse Morris Trust with AT&T shareholders holding a 71% interest in the new company's stock and appointing seven board members, and Discovery shareholders holding a 29% interest and appointing six board members. AT&T would receive US$43 billion in cash and debt from the divestment.[7][8][9]

The new company would be led by Discovery's current CEO, David Zaslav; WarnerMedia's CEO Jason Kilar's position in the new company was uncertain.[7] Zaslav stated that the two companies would spend a combined US$20 billion annually on content (outpacing Disney, Netflix and Amazon.com). The company will aim to expand their streaming services, which includes WarnerMedia's HBO Max, to reach 400 million global subscribers.[8]

On June 1, 2021, it was announced that the merged company would be known as Warner Bros. Discovery, and an interim wordmark was unveiled with the tagline "The stuff that dreams are made of"—a quote from the 1941 Warner Bros. film The Maltese Falcon. Zaslav explained that the company aimed to be the "most innovative, exciting and fun place to tell stories in the world", and would combine Warner Bros.' "fabled hundred-year legacy of creative, authentic storytelling and taking bold risks to bring the most amazing stories to life" with Discovery's "integrity, innovation and inspiration."[10][11]

In an SEC filing on November 18, 2021, Discovery Inc. revealed that talks with AT&T had fallen through, in April 2021, due to disagreements over the ownership of the new company between AT&T and Discovery shareholders, and the amount of debt transferred to Discovery when they merged with WarnerMedia, before talks resumed on May 17, 2021.[12]

In November 2021, during an earnings call, Discovery Streaming CEO JB Perrette discussed possible options for its Discovery+ streaming service post-merger, including bundling the service with HBO Max and eventually merging them under a single platform with a mixture of both companies' technologies. He also noted that WBD may prioritize launching Discovery+ and HBO Max as a unified platform in markets where Discovery+ has yet to launch, such as another parts of the Asia-Pacific.[13] On March 14, 2022, Discovery CFO Gunnar Wiedenfels—who would assume the same position post-merger—confirmed that such a transition was a long-term goal.[14]

On December 22, 2021, the transaction was approved by the European Commission.[15][16] On January 5, 2022, The Wall Street Journal reported that WarnerMedia and Paramount Global (at the time named ViacomCBS) were exploring a possible sale of either a majority stake or all of The CW, and that Nexstar Media Group (which became The CW's largest affiliate group when it acquired former WB co-owner Tribune Broadcasting in 2019) was considered a leading bidder.[17] The news led to speculation that, should a sale take place, new ownership could steer the network in a new direction, transforming The CW from a young adult-oriented network into one that featured more unscripted and even national news programming.[18] However, reports also indicated that WarnerMedia and ViacomCBS could include a contractual commitment that would require any new owner to buy new programming from those companies, allowing them to reap some continual revenue through the network.[19] Network president/CEO Mark Pedowitz confirmed talks of a potential sale in a memo to CW staffers, but added that "It's too early to speculate what might happen" and that the network "must continue to do what we do best."[20][21]

On January 26, 2022, AT&T CEO John Stankey stated that the merger was expected to close sometime during the second quarter of 2022.[22][23] On February 1, 2022, it was reported that AT&T had finalized the structure of the merger: WarnerMedia would be spun off pro rata to AT&T's shareholders, and then merge into Discovery Inc. to form the new company.[24][25] The transaction was approved by the Brazilian antitrust regulator Cade on February 7,[26] followed by the United States Department of Justice on February 9.[27] On March 11, 2022, the merger was approved by Discovery's shareholders. Due to the structure of the merger, it does not require separate approval from AT&T shareholders.[28][29]

In an SEC filing on March 25, 2022, AT&T stated that two-way trading of WBD stock with that of AT&T would begin on April 4, 2022, and that a special dividend will be issued the next day to give AT&T shareholders a 0.24 share in WBD for each share of AT&T common stock they hold.[30][31] The merger was officially completed on April 8, 2022, with trading beginning on the Nasdaq on April 11; at this time the company unveiled its final logo, which features a rendition of Warner Bros.' historic shield logo.[1]

The combined company has retained several top executives from WarnerMedia, including film and television heads Toby Emmerich and Channing Dungey, and HBO and HBO Max chief content officer Casey Bloys. Most of the company's top executive roles are filled by their Discovery counterparts, including Gunnar Wiedenfels as CFO, JB Perrette as president and CEO of global streaming and interactive, and Discovery's chief lifestyle brands officer Kathleen Finch—whose role has been expanded to cover most of the combined company's U.S. linear networks, besides CNN (which was taken over by Chris Licht, replacing the outgoing Jeff Zucker), Magnolia Network (which reports to Bloys, after having previously reported directly to Zaslav under Discovery), and the Turner Sports unit (which currently has a vacancy with the departure of Zucker, as Licht will only oversee CNN).[32][33][34]

In an introductory town hall, Zaslav stated that the combined company would need to have "one culture" that "starts with people feeling safe, people feeling valued for who they are", as opposed what he described as a culture of internal competition between WarnerMedia's businesses.[35] On April 14, 2022, Variety reported that the company was exploring a restructuring of DC Entertainment to create a "solidified content vertical" more akin to Marvel Studios, which would be separated from Warner Bros. and have a central figure to oversee its projects.[36] On April 21, 2022, Licht and Perrette announced the shutdown of CNN's streaming service CNN+, which had only launched two weeks prior to the completion of the merger; the new leadership considered it to be incompatible with their goal of a unified streaming service for all Warner Bros. Discovery properties.[37][38][39]

In an investors' call on April 26 (concurrent with the first quarter earnings reports for Discovery Inc., excluding WarnerMedia as separate entities), Zaslav contrasted the company's streaming businesses with those of Netflix (whose stock saw a decline after a quarterly loss in subscribers), describing Warner Bros. Discovery as being a "far more balanced and competitive company" that would "invest at scale smartly" and not "overspend" on growth and that its streaming businesses would complement its linear television. He stated that HBO Max had "meaningful subscriber churn", and that the planned merger of it with Discovery+ would help to reduce it by offering a broader array of content.[40] The following day, Zaslav purchased approximately $1 million worth of Warner Bros. Discovery stock.[41]