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Discovery Shareholders Approve $43 Billion WarnerMedia Merger

Discovery investors voted in approval of the company’s $43 billion acquisition of WarnerMedia from AT&T to create Warner Bros. Discovery during a special meeting of stockholders on Friday, marking one of the final formal steps before the transaction can close.

The deal, a spinoff of WarnerMedia from AT&T, is expected to be completed early in Q2, with insiders telling Variety the estimated date is between April 11-28. The merger has already received approval from the U.S. Department of Justice and the boards of directors of both AT&T and Discovery.

Discovery chief David Zaslav will serve as president and CEO of the newly merged company, Warner Bros. Discovery, with WarnerMedia CEO Jason Kilar expected to exit.

Zaslav’s first major hire for WBD was Chris Licht as the new chief of CNN, following the ousting of Jeff Zucker after a WarnerMedia investigation found he hadn’t disclosed a consensual relationship with now-exited CNN marketing chief Allison Gollust.

Discovery ended 2021 with $4 billion in cash on its books, and it generated some $2.4 billion in free cash flow for the year. Warner Bros. Discovery will shoulder significant debt after the transaction is complete, with Discovery executives vowing to reduce the leverage ratio from about 4.5 times earnings immediately after the deal closes to 2.5 to 3 times earnings within two years. At close of the WarnerMedia spinoff, AT&T expects to reap $43 billion (and the new WBD to assume up approximately $43 billion of additional debt). AT&T aims to use the proceeds from the WarnerMedia spinoff to pay down net debt, which stood at $156.2 billion at the end of 2021.

As Discovery conducted a mostly ceremonial poll of shareholders, AT&T was signaling the start of a new chapter less than four years after acquiring WarnerMedia, formerly known as Time Warner. The telco giant conducted a virtual investor conference at the exact same time as the Discovery vote to unveil its post-spinoff strategy. The push into entertainment was initiated by the previous regime, led by former AT&T chairman-CEO Randall Stephenson. His successor, John Stankey, has been cleaning up the debt and destruction ever since.

Stankey has hedged his bets in unloading WarnerMedia with a deal that hands control to the Discovery camp but leaves his shareholders with 71% of the enlarged company.

Discovery stock was trading at $24.85 per share just after 10:50 a.m. ET Friday, with AT&T selling for $23.55 per share.

Variety's Jennifer Maas contributed to this post.


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