AT&T’s $43bn horror movie nears end as it offloads WarnerMedia stake

AT&T’s $43bn horror movie nears end as it offloads WarnerMedia stake

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AT&T has changed its position again on its WarnerMedia stake – by deciding to offload all of its remaining shares to shareholders.

Now, it said in a filing this morning, its US$43 billion to merge WarnerMedia with Discovery will mean AT&T’s shareholders will get new shares in what will be renamed Warner Bros Discovery.

“If you owned 100 shares of AT&T as of the record date, you would still hold 100 shares of AT&T and you would also receive an estimated 24 shares of WBD” – the new ticker symbol for Warner Bros Discovery – said the company’s filing.

This means AT&T as a corporation will be completely free of any shareholdings in the company it bought for $85 billion only a few years ago.

It announced plans to buy the former Time Warner in 2016, fought threats by the Donald Trump administration to complete the deal, and finally completed the transaction in 2019.

And now it will be out of Time Warner/WarnerMedia entirely by the end of the second quarter of 2022.

AT&T said this morning that “on the closing date of the transaction, AT&T shareholders will receive, on a tax-free basis, an estimated 0.24 shares of the new Warner Bros Discovery (WBD) common stock for each share of AT&T common stock held as of the record date for the pro rata distribution”.

The exact number of shares will be determined closer to the closing, said AT&T. It added: “AT&T shareholders will continue to hold the same number of shares of AT&T after the closing of the transaction.”

It noted: “Just prior to closing, all classes of shares of Discovery capital stock will be converted and reclassified into common shares of WBD with one vote per share.”

AT&T announced its reversal of its 2016 media ambition in May 2021, following a campaign by activist shareholder Elliott, which said in 2019 in a letter to shareholders: “AT&T has been a disappointing investment for its shareholders relative to nearly any benchmark.”

In addition to the Time Warner/WarnerMedia deal, AT&T had also spent $67 billion buying DirecTV in 2014: all with “damaging results” said Elliott.

Last year AT&T sold DirectTV to US investor TPG – not the Australian network operator of the same name – for just $7.6 billion in cash. TPG said it would take on $200 million of DirecTV debt for a 30% stake, and got AT&T TV and U-verse thrown into the bargain.



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