AT&T to Spin Off WarnerMedia — Including CNN — and Combine with Discovery

Just three years after getting into the media business, telecom giant AT&T is going in a new direction by spinning off WarnerMedia assets it acquired in 2018. Turner Broadcasting properties and HBO are among the assets included in the deal, but the future of CNN and its CEO Jeff Zucker under new leadership will have the biggest impact on the current political media landscape.

AT&T will maintain an ownership stake in the new entity, which will be combined with Discovery Network. David Zazlav, who has overseen Discovery for two decades, will lead the new entity. Zucker and Zaslav are reported to have a close relationship which has led to speculation from industry insiders that Zucker could re-up a new contract that is currently set to expire at roughly year’s end.

In an interview with New York Times’ Ben Smith from February, Zaslav said he had not talked to his “East Hampton golfing partner” Zucker about buy CNN from AT&T and ” signaled that he was leery of the political charge that comes with top-shelf American cable news,” as Smith wrote. “News is very overplayed and excoriated here in the U.S.,” Zaslav said,

The news came via an early morning press release which was first covered by CNN’s Brian Stelter, who confirmed the news that was first broken by Bloomberg. Stelter writes:

On Monday morning AT&T (T) and Discovery, Inc. (DISCA)announced a deal under which AT&T’s WarnerMedia will be spun off and combined with Discovery in a new standalone media company.

The deal, subject to regulatory approval, will combine two treasure troves of content, including the HBO Max and discovery+ streaming services. CNN will be included in the transaction.

Discovery CEO David Zaslav will run the combined business, according to Monday’s announcement. “Executives from both companies” will be in “key leadership roles” according to a press release.

Stelter appeared on CNN’s New Day to discuss the news of the deal, which you can see below:

In a press release, AT&T John Stankey said the following:

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. 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. For AT&T shareholders, this is an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity. AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend. Plus, they will get a stake in the new company, a global media leader that can build one of the top streaming platforms in the world.

Discovery CEO David Zaslav Said:

During my many conversations with John, we always come back to the same simple and powerful strategic principle: these assets are better and more valuable together. It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity. With a library of cherished IP, dynamite management teams and global expertise in every market in the world, we believe everyone wins…consumers with more diverse choices, talent and storytellers with more resources and compelling pathways to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet that is better positioned to compete with the world’s largest streamers. We will build a new chapter together with the creative and talented WarnerMedia team and these incredible assets built on a nearly 100-year legacy of the most wonderful storytelling in the world. That will be our singular mission: to focus on telling the most amazing stories and have a ton of fun doing it.

Zucker is a popular figure at CNN and the thought of his leaving his leadership role at CNN has created something of a disruption in plans. There has been talk that Zucker did not particularly get along with WarnerMedia head Jason Kilar, and perhaps that was behind his unwillingness to sign a new contract. This new entity, if approved, creates a new environment that may be more enticing for Zucker to stay on in a larger capacity.