WarnerMedia Spinoff Will Mark Starting Line of a New Era for AT&T, CEO Says

On the cusp of spinning off WarnerMedia — ending AT&T’s ill-fated foray into the entertainment biz — telco chief CEO John Stankey touted the company as getting into fighting shape to succeed in its core wireless and broadband sectors.

AT&T released updated financial guidance on Friday, ahead of an investor day presentation. Separately, Discovery shareholders also Friday are set to vote on whether to approve the WarnerMedia deal. Pending that vote and final regulatory approvals, the $43 billion Discovery-WarnerMedia transaction is expected to close as soon as mid-April.

“Now that the close of the WarnerMedia deal is approaching, we are near the starting line of a new era for AT&T,” Stankey said in prepared remarks. “The transformation we’ve undergone over the past 18 months while delivering outstanding operational results has brought us to this point. We will be a simpler, more focused company with the intent to become America’s best broadband provider.”

AT&T plans to boost investment in its strategic areas of growth — 5G and fiber — and “at the same time, we will retain our focus on growing customer relationships, continuously improve our execution to enhance the customer experience and deliver growth and returns for our shareholders,” Stankey said.

With the spinoff of WarnerMedia and combination with Discovery, AT&T will receive $43 billion and AT&T shareholders will receive stock representing approximately 71% of the new Warner Bros. Discovery. Existing Discovery shareholders will own approximately 29% of the new company on a fully diluted basis.

AT&T has also shed other non-core assets, including inking a deal to sell Xandr to Microsoft in December 2021; selling WarnerMedia’s mobile games app studio, Playdemic; selling Vrio, AT&T’s Latin America video operations; closing a deal July 2021 with TPG to form a new company named DirecTV Entertainment Holdings, comprising the telco’s U.S. video business (including DirecTV, AT&T TV and U-verse video services); and selling the Crunchyroll anime business in Q3 2021 to Sony for $1.2 billion.

 

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