AT&T to spin-off WarnerMedia with Discovery in deal worth $43 billion

AT&T has penned a deal with Discovery to spin-off Warner Bros. Interactive Entertainment (WBIE) parent WarnerMedia and Discovery itself into a new standalone company. 

The terms of the agreement will see AT&T receive $43 billion and enable the creation of "one of the largest global streaming players" by leveraging WarnerMedia's "premium entertainment, sports and news assets."

According to a press release, the new company will be led by Discovery president and CEO David Zaslav and will "bring together the strongest leadership teams, content creators, and high-quality series and film libraries in the media business."

"The new company will compete globally in the fast-growing direct-to-consumer business -- bringing compelling content to subscribers across its portfolio, including HBO Max and the recently launched Discovery+," reads the announcement. 

"The transaction will combine WarnerMedia's storied content library of popular and valuable IP with Discovery’s global footprint, trove of local-language content and deep regional expertise across more than 200 countries and territories."

The announcement made no mention of WBIE, which comprises a number of wholly-owned game companies including TT Games, Rocksteady Games, NetherRealm Studios, WB Games Boston and Montreal, Avalanche Software, and Monolith Productions, and oversees franchises like Batman: Arkham, Mortal Kombat, and Injustice.

[Update 3:00 PM ET: Information received by IGN's Julia Alexander indicates that some elements of Warner Bros. Interactive Entertainment are included in the sale, but not all. So far, it's still unclear which of the above studios will change hands following the WarnerMedia and Discover merger.]

WBIE is a subsidiary of Warner Bros. Home Entertainment, which itself is a subsidiary of WarnerMedia. Back in September 2020 it was reported that AT&T was considering selling WBIE before having a change of heart after deeming the company too valuable. 

The transaction is expected to close in mid-2022, subject to approval by Discovery shareholders and customary closing conditions. We've reached out to AT&T to clarify how (if at all) the move will affect WBIE.