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Friday, Jun 9, 2023

AT&T to Spin Off WarnerMedia in $43 Billion Transaction

Telecommunications conglomerate AT&T; Inc. announced Tuesday that it plans to spin off WarnerMedia in a $43 billion transaction that will merge AT&T;’s media properties with Discovery Inc.

WarnerMedia owns Warner Bros. Entertainment in Burbank. AT&T; earlier announced plans to shed its media subsidiary, but Tuesday provided financial details of the deal.

AT&T; shareholders will receive an estimated 0.24 shares of Warner Bros. Discovery (WBD) common stock for each share of AT&T; they own. Once the transaction is closed, the shareholders will own 71 percent of the Warner Bros. Discovery company.

AT&T;’s board of directors approved an expected post-close annual dividend of $1.11 per AT&T; share to account for the distribution of WarnerMedia to AT&T; shareholders.

The post-close annual dividend was also approved to size the annual dividend payout at approximately 40 percent of projected free cash flow to enable investment in growth opportunities, according to a statement.

“Rather than try to account for market volatility in the near-term and decide where to apportion value in the process of doing an exchange of shares, the spin-off distribution will let the market do what markets do best,” AT&T; Chief Executive John Stankey said in a statement. “We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent.”

The transaction is expected to close in the second quarter of this year.

Antonio Pequeño IV
Antonio Pequeño IV
Antonio “Tony” Pequeño IV is a reporter covering health care, finance and law for the San Fernando Valley Business Journal. He specializes in reporting on some of the biggest names in the Valley’s biotechnology sector. In addition to his work with the Business Journal, Tony has reported with BuzzFeed News on the unsupervised use of Clearview AI, a controversial facial recognition technology. Tony, who also conducts freelance reporting, graduated from the USC’s Master of Science in Journalism program in 2021. He is in his fifth year as a journalist as of 2021.

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