Discovery’s proposed $43 billion merger with AT&T’s WarnerMedia cleared a major regulatory hurdle today.
The Federal Trade Commission and the U.S. Justice Department’s Antitrust Division essentially let the clock run out mounting a challenge to the merger, which will bring together Discovery’s cable network and streaming service portfolio with Warner Bros., HBO and Turner.
The regulatory OK puts to rest concerns over the merger, which members of Congress last year warned “threatens to enhance the market power of the combined firm and substantially lessen competition in the media and entertainment industry, harming both consumers and American workers.”
AT&T CEO John Stankey, speaking at a UBS investor conference in December, called the concerns “unfounded.”
“It’s clearly indicated that there’s nothing unusual about this transaction,” he said.
The approval seemingly keeps AT&T and Discovery on track to close the merger—which will see AT&T spin off 100% of its interest in WarnerMedia—in the first half of 2022 as previously disclosed.
Under the terms of the all-stock transaction, AT&T will receive $43 billion and AT&T’s shareholders will receive stock representing approximately 71% of the new company, Warner Bros. Discovery, Inc. Existing Discovery shareholders will own approximately 29% of the new company.
As previously announced, Discovery President and CEO David Zaslav will run the combined company, which will own Discovery+, HBO Max, Warner Bros. and several of the most popular cable networks. The merger is expected to close in the second quarter.
Warner Bros. Discovery expects cost synergies of more than $3 billion on a run-rate basis by the end of the second full year after the closing of the transaction thanks to new technology, marketing and platform efficiencies.
AT&T plans to hold an investor meeting on March 11 to further discuss merger details.