- The merger of AT&T’s WarnerMedia with media company Discovery includes at least $3 billion of annual “cost synergies.”
- AT&T didn’t detail these cost cuts when it announced the merger on Monday.
- Cost “synergies” often mean layoffs.
- See more stories on Insider’s business page.
US telecom giant AT&T on Monday announced it would merge its content unit WarnerMedia with media company Discovery, creating a new streaming giant that could go head-to-head with Netflix and Disney.
In the press release, AT&T highlighted that the deal had “at least $3 billion in expected cost synergies annually.” These “synergies,” or cost reductions, would allow the newly formed company to invest in its content and scale its business, AT&T said.
Cost “synergies” are a common feature of big deals, especially when companies have overlapping operations, as is the case with WarnerMedia and Discovery. They can take many forms, including layoffs, the consolidation of suppliers, or the sharing of office space.
WarnerMedia – which includes HBO, TNT, CNN, and Warner Bros. – and Discovery both have entertainment and news assets. Both have streaming platforms: HBO Max for WarnerMedia, and Discovery Plus for Discovery.
AT&T did not detail the cost savings when it announced the deal Monday. Insider has reached out to AT&T and Discovery for comment.
AT&T shareholders would receive stock equating to 71% of the new company, while Discovery shareholders would own 29%, the companies said in the press release.