Down Debt

European Commission clears Discovery and WarnerMedia merger

The European Commission has granted unconditional antitrust clearance to Discovery’s proposed acquisition of the WarnerMedia business from AT&T Inc.

“The approval of the European Commission is a key step towards the completion of our proposed transaction with AT&T,” David Zaslav, president and CEO of Discovery, said in a statement Wednesday.

“Today we are approaching an important milestone in the creation of Warner Bros. Discovery, a leading entertainment company that will be a leading global investor in premium content and positioned to serve consumers with what we believe to be the most comprehensive content offering under one roof. roof, ”added Zaslav, who will be the CEO of the combined company.

In May, it was revealed that AT&T is splitting from WarnerMedia to combine it with Discovery, a transaction expected to close in mid-2022 pending regulatory approvals. The proposed merger would combine the assets of WarnerMedia – including HBO Max, Turner and Warner Bros. – with Discovery’s collection of national and international cable channels, including Discovery, TLC, Animal Planet, OWN, Food Network and HGTV.

As part of the planned WarnerMedia spin, the phone company will receive $ 43 billion in cash to pay off its debt. In November, Discovery predicted the combined entity would have a debt to equity ratio of 4.5 times annual earnings before interest, taxes, depreciation and amortization, down from the earlier expectation of 5 times EBITDA.

The European antitrust clearance will be a relief for Discovery, as it is the opposite in the United States. More than 30 Democratic members of Congress wrote earlier this month to US Attorney General Merrick Garland and Assistant Attorney General Jonathan Kanter, citing “antitrust concerns.”

“The merger threatens to increase the market power of the combined company and significantly reduce competition in the media and entertainment industry, harming both American consumers and workers,” the letter said.

AT & T’s CEO later said those fears were unfounded.

Discovery on Wednesday said the company currently expects the WarnerMedia transaction to close in mid-2022, subject to Discovery shareholder approval and other regulatory approvals. No approval is required by AT&T shareholders.