The Executive branch of the European Union, the European Commission, has reportedly approved unconditional antitrust clearance to mass media giant Discovery, Inc.’s proposal for the acquisition of American conglomerate AT&T’s media corporation, WarnerMedia, business.
David Zaslav, CEO and President of Discovery, announced that the approval from the European Commission has been a key milestone in the company’s proposed deal with AT&T.
Zaslav added that the company is now one step closer to the creation of a premier entertainment entity, to be named Warner Bros. Discovery, which will become one of the leading investors for premium content globally and offer consumers, what they believe as, complete content, all under one roof.
David Zaslav will also be serving as the CEO of the merged company.
The news about AT&T’s plans of splitting off WarnerMedia and combining it with Discovery was disclosed earlier in May this year, with the transaction expected to close around mid of 2022, awaiting regulatory approvals.
With the proposed merger, WarnerMedia’s assets, which include HBO Max, Warner Bros., and Turner, will be combined with Discovery’s domestic and international collections of cable channels, such as Discovery, Animal Planet, TLC, Food Network, OWN, and HGTV.
AT&T, the world’s largest telecom company, will receive $43 billion in cash from the transaction, to pay down its debt.
Discovery has predicted that the new combined entity will have a debt ratio 4.5 times the annual earnings before interest, taxes, depreciation amortization, as compared to the previously expected 5 times EBITDA.
The antitrust clearance comes as a relief for Discovery, which is currently facing a bigger problem in the United States.
Over 30 Democratic Congress members have written a letter to the US Attorney General, Merrick Garland, as well as to the Assistant Attorney General, Jonathan Kanter, regarding antitrust concerns about the merger.
The letter states that with the merger, the combined entity will enhance its power in the media and entertainment industry while lowering market competition, causing harm to consumers and the workers in the country.
AT&T’s CEO had later stated that the claims in the letter did not hold any ground.
Source credit: https://variety.com/2021/tv/global/european-commission-discovery-warnermedia-merger-antitrust-1235142263/