“Approval from the European Commission is a key milestone toward completing our proposed transaction with AT&T,” said David Zaslav, president and CEO of Discovery, in a statement on Wednesday.
“Today we move one important step closer to creating Warner Bros. Discovery, a premier entertainment company that will be one of the world’s leading investors in premium content and one positioned to serve consumers with what we believe will be the most complete content offering under one roof,” added Zaslav, who will serve as the CEO of the combined company.
In May it was revealed that AT&T is spinning off WarnerMedia to combine it with Discovery, a transaction expected to close in mid-2022 pending regulatory approvals. The proposed merger would combine WarnerMedia’s assets — including HBO Max, Turner and Warner Bros. — with Discovery’s collection of domestic and international cable channels, including Discovery, TLC, Animal Planet, OWN, Food Network and HGTV.
Under the planned WarnerMedia spin, the telco will receive $43 billion in cash to pay down debt. In November, Discovery projected that the combined entity would have a debt ratio of 4.5 times annual earnings before interest, taxes, depreciation and amortization, down from the previously expectation of five times EBITDA.
The European antitrust clearance will be a relief to Discovery as it faces a bigger hurdle in the U.S. More than 30 Democratic members of Congress wrote a letter earlier this month to U.S. Attorney General Merrick Garland and Assistant Attorney General Jonathan Kanter citing “antitrust concerns.”
“The merger threatens to enhance the market power of the combined firm and substantially lessen competition in the media and entertainment industry, harming both consumers and American workers,” the letter stated.
AT&T’s CEO subsequently stated that these fears were unfounded.
On Wednesday, Discovery said the company currently anticipates the closing of the WarnerMedia transaction to occur in mid-2022, subject to approval by Discovery stockholders and others. No approval is required by AT&T stockholders.