AT&T's stock rises as the review of the WarnerMedia-Discovery deal advances, along with strong streaming and wireless growth – Update
On good subscriber statistics and promising indicators for the forthcoming WarnerMedia-Discovery deal, AT&T's beaten-down shares climbed more than 2% today to a three-month high.
According to CNBC, the $43 billion merger of WarnerMedia and Discovery, which is being spun off from AT&T less than three years after the $85.4 billion transaction for Time Warner, is expected to finish in April. According to individuals close to the process, the transaction is "just a few, let's call it three months away from completion," according to the network's David Faber.
AT&T shares were up more than 4% at one point during the trading day, an uncommon explosion for the range-bound stock. Overall equities fell in the second half of the trading day after some negative news from the Federal Reserve Bank, and AT&T closed at $26.21. It has lost ground, along with Discovery shares, since the agreement was first announced, so the upward trend in the early days of 2022 is a welcome change of pace.
AT&T and Discovery have repeatedly forecasted a closing in the middle of the year. "Could it speed up and happen sooner?" During an interview at a Citibank investor conference, AT&T CEO John Stankey declared, "It's certainly plausible." "It's also possible that it will slip." Right now, the momentum is that we're accomplishing precisely what we predicted would happen."
Aside from the great sentiments around the spinoff, AT&T also announced a variety of favorable 2021 figures, including subscription levels for HBO and HBO Max, as well as its cellular business. HBO and HBO Max had 73.8 million global subscribers at the end of 2021, exceeding internal expectations. Later this quarter, the company will provide its full results as well as quarterly financials.
The Warner-Discovery combination has cleared various hurdles, most recently receiving European Union permission. The transaction will be voted on by Discovery shareholders soon. Stankey stated that the process in the United States has gone smoothly, including dealing with antitrust officials at the Department of Justice. Former President Donald Trump's Justice Department officials famously launched a lawsuit to halt the $85.4 billion AT&T-Time Warner merger. A federal judge ruled against the Department of Justice, and an appeals court upheld the decision in early 2019.
Stankey added that discussions with the DOJ and other officials are "following almost like the script and the expectations." "We're happy with how that's going," AT&T executives said. Conversations have been fruitful and responsive in both directions.
The transaction's structure and timetable, he continued, are in accordance with what was laid forth in May. TPG, a private equity group, owns a portion of DirecTV, which was spun out by the telecom behemoth. Shareholders lost tens of billions of dollars as a result of the Time Warner and DirecTV mergers. After the WarnerMedia purchase closes, AT&T, like rival Verizon, expects to focus on its conventional telecom core, something that many shareholders have lobbied for in recent years.
