AT&T has confirmed plans to spin off WarnerMedia in a $43bn transaction to merge its media properties with Discovery Inc.

As part of the deal first announced last year, AT&T shareholders will own 71pc of the new Warner Bros. Discovery company and will receive 0.24 shares of Warner Bros. Discovery for each AT&T share they own. Existing Discovery shareholders will own approximately 29pc of the new company.

AT&T’s properties under the WarnerMedia umbrella include CNN, HBO, Warner Bros and several other TV stations, while Discovery owns its eponymous TV station, Animal Planet and a slew of other networks.

AT&T acquired Time Warner in 2018 for $85bn, a deal which placed the company in significant debt.

The new spin off company could become a massive new player in the streaming market and combine two portfolios of content, bringing together TV, movies and news.

AT&T CEO John Stankey said the US telecoms company is confident the decision to spin off WarnerMedia will execute the transaction in the most seamless manner possible to support long-term value generation.

“Rather than try to account for market volatility in the near-term and decide where to apportion value in the process of doing an exchange of shares, the spin-off distribution will let the market do what markets do best,” Stankey said. “We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent.”

AT&T said its board approved an annual dividend of $1.11 a share, down from $2.08, to account for the spin off of Warner Bros. Discovery Inc.

The telecoms company expects to use the $43bn to help position it as one of the best capitalised 5G and fiber broadband companies in the US.

The deal is expected to close in the second quarter of this year. Once created, Warner Bros. Discovery will be thrust into the highly competitive streaming market.

HBO Max, the Warner-led streaming service owned by AT&T, is a much smaller player in the streaming landscape when put up against larger competitors, ending 2021 with more than 73m subscribers.

Last August, Disney+ beat expectations and narrowed the gap between itself and Netflix with 12.4m new subscribers.

While Netflix remains the top contender in the streaming industry with more than 220m subscribers, it has experienced a slowdown in subscriber additions and gave a weak forecast for the first quarter of 2022, causing shares to plunge by 20pc last month.

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