AT&T will combine its massive media operations that include CNN, HBO, TNT and TBS in a 43 billion dollar deal with Discovery, the owner of lifestyle networks including the Food Network and HGTV.
Faced with strong competition from streaming services, major broadcast media companies have sought strength through mergers.
The deal would create a separate media company with households increasingly abandoning cable and satellite TV, looking instead at Netflix, Amazon Prime Video, Facebook, TikTok and YouTube.
AT&T had pushed into the streaming sector through HBO Max, a direct competitor with Netflix, Apple, Disney and Comcast. Discovery launched a standalone streaming service called Discovery+ this year.
The new company will be able to invest more in original streaming content. It will house almost 200,000 hours of programming and bring together more than 100 brands under one global portfolio, including DC Comics, Cartoon Network, Eurosport, Magnolia, TLC and Animal Planet.
The deal to give up its media business marks a major shift by AT&T, which fought hard to push a transaction through in 2018 to buy Time Warner for 85.4 billion dollars with the Justice Department trying to block the deal on anti-competitive reasons.
Discovery President and CEO David Zaslav will lead the new company. The deal is expected to close by the middle of next year. It still needs approval from Discovery shareholders. AT&T stockholders do not need to vote on the transaction.