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AT&T is spinning off its remaining WarnerMedia services to create a new streaming service together with Discovery, to compete with Netflix, Apple TV+, and other omnibus streaming services.
According to CNN, the new and as-yet-untitled service will contain HBO Max, Discovery+, and CNN itself. HBO Max is also reportedly planning to use Discovery's international business to help it expand outside the US.
"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 Stankey in a statement.
"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," he continued.
The new service will be run by Discovery's CEO David Zaslav, who oversaw the launch of non-fiction streaming utilizing popular channels TLC and Animal Planet. The spinoff is being described as a joint venture, with Zaslav working with "executives from both companies."
However, if the deal gains regulatory approval, it will mean AT&T getting to reduce the amount of debt it has been carrying. "AT&T would receive $43 billion (subject to adjustment) in a combination of cash, debt securities, and WarnerMedia's retention of certain debt," said the companies in a press release.
Shares of both AT&T and Discovery rose on the announcement.
The news follows AT&T's early 2021 revision of its media services. It closed down its previous AT&T TV Now service, and moved subscribers over to its separate AT&T TV platform.
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