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Discovery to Merge with AT&T's WarnerMedia



Discovery $DISCA is the latest addition to my portfolio and they are now going to merge with WarnerMedia owned by AT&T $T .


๐Ÿค The deal is a Reverse Morris Trust Transaction, in other words, ๐˜ผ๐™&๐™ ๐™ฌ๐™ž๐™ก๐™ก ๐™จ๐™ฅ๐™ž๐™ฃ๐™ค๐™›๐™› ๐™’๐™–๐™ง๐™ฃ๐™š๐™ง๐™ˆ๐™š๐™™๐™ž๐™– ๐™ฌ๐™๐™ž๐™˜๐™ ๐™ฌ๐™ž๐™ก๐™ก ๐™ฉ๐™๐™š๐™ฃ ๐™ข๐™š๐™ง๐™œ๐™š ๐™ฌ๐™ž๐™ฉ๐™ ๐˜ฟ๐™ž๐™จ๐™˜๐™ค๐™ซ๐™š๐™ง๐™ฎ. This is done to avoid taxes. 100% of Discovery shares will be converted into shares of the new company with Discovery shareholders owning 29% of it. $43 Billion of the debt of AT&T will be assumed by the new company. David Zaslav, CEO of Discovery, will be the CEO of the new company.


๐Ÿ“บ WarnerMedia owns Warner Bros Studios, DC, CNN, HBO,... while Discovery owns mostly factual TV networks such as Discovery Channel and the Food Network. This deal is going to create a ๐™ˆ๐™š๐™™๐™ž๐™– ๐™œ๐™ž๐™–๐™ฃ๐™ฉ hoping to compete with Netflix $NFLX , Disney $DIS and ViacomCBS $VIAC .


๐™๐™ง๐™ค๐™ข ๐™ฉ๐™๐™š ๐™ฅ๐™ค๐™ž๐™ฃ๐™ฉ ๐™ค๐™› ๐™ซ๐™ž๐™š๐™ฌ ๐™ค๐™› ๐™–๐™ฃ ๐˜ผ๐™&๐™ ๐™จ๐™๐™–๐™ง๐™š๐™๐™ค๐™ก๐™™๐™š๐™ง, this deal is good since it will deleverage the company and allow them to focus on telecommunications but they will also cut their dividends and AT&T is known to be a dividend aristocrat.


๐ŸŒŽ๐™๐™ค๐™ง ๐˜ฟ๐™ž๐™จ๐™˜๐™ค๐™ซ๐™š๐™ง๐™ฎ, the risk is that they are no longer going to be a 100% factual company, bringing additional costs. But having HBO in their portfolio can help them advance their own streaming platform better.


Watch the full video on YouTube:

https://www.youtube.com/watch?v=8Is0JDx_ffI&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=2


Full analysis of deal:

https://ishfaaqpeerally.teachable.com/courses/662813/lectures/32475061



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