AT&T opts for WarnerMedia spinoff in Discovery merger, cuts dividend

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AT&T Inc said on Tuesday it will spin off WarnerMedia in a $43 billion transaction to merge its media properties with Discovery Inc and also cut its dividend by nearly half.

AT&T shareholders will own 71% of the new Warner Bros. Discovery company and will receive a 0.24 shares of Warner Bros. Discovery for each AT&T share they own. AT&T will have 7.2 billion diluted shares outstanding after the transaction closes.

The deal to unwind AT&T's $85 billion purchase of Time Warner was announced early last year, but some financial details were not disclosed until Tuesday. "We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent." The transaction will help reduce AT&T's heavy debt load. It ended the fourth quarter with net debt of $156.2 billion, giving it a net debt to adjusted EBITDA ratio of about 3.22 times.

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AT&T to Spin Off WarnerMedia in $43 Billion Discovery Media Merger, Cuts DividendAT&T said on Tuesday it will spin off WarnerMedia in a $43 billion transaction to merge its media properties with Discovery.
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