Company Of The Day: AT&T

by Trefis Team
+7.61%
Upside
28.18
Market
30.32
Trefis
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AT&T
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What?

AT&T (NYSE:T)  will spin off its media operations in a deal with Discovery Inc. AT&T will receive $43 billion in cash and debt securities as part of the deal, and its shareholders are expected to hold about 71% of the new company.

Why?

The deal will combine Discovery’s reality-TV programming with AT&T’s diverse content from WarnerMedia, potentially challenging media and streaming behemoths such as Disney and Netflix. The spinoff could also help AT&T – which is one of the world’s most heavily indebted nonfinancial companies – cut debt.

So What?

We view the deal as quite positive for AT&T, given that its strategy of combining telecom services with media didn’t make much headway.  However, the stock declined by about 6% in Tuesday’s trading, as investors believe AT&T overpaid for its 2018 purchase of Time Warner. Moreover, AT&T indicated that it plans to reduce its dividend after the completion of the merger.

See Our Complete Analysis For AT&T

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