AT&T, owner of HBO and Warner Bros Studios, and Discovery has announced that they will combine their content assets to create a standalone global entertainment and media business.

Discovery President and Chief Executive David Zaslav will lead the proposed new company, which brings together one of Hollywood's most powerful studios, including the Harry Potter and Batman franchises, and Discovery's stable of unscripted home, cooking, and nature and science shows.

The new company, whose name will be disclosed by next week, will be 71percent owned by AT&T's shareholders and 29 percent by Discovery's.

Other details, including the future of WarnerMedia CEO Jason Kilar in the new company and how the combined properties and services will be arranged, have yet to be worked out, executives said on a call with reporters after the deal was announced.

The move marks the unwinding of AT&T's $108.7 BN acquisition of U.S. media conglomerate Time Warner in 2018, and underscores its recognition that TV viewership has moved to streaming, where scale is required to take on the likes of Netflix Inc and Walt Disney Co.

"The opportunities in direct to consumer streaming are rapidly evolving, and to keep pace and maintain a leadership position, several things are required global scale, access to capital, a broad array of high-quality content and industry best talent," AT&T Chief Executive John Stankey told a news briefing.

AT&T said it will pocket $43 billion in the tax-free spin-off of its media assets, partly in cash and partly as a reduction of its $160.7 BN debt pile.

"While further details have yet to emerge, the proposed horizontal combination would create a global content behemoth uniting Warner Media's premier news and entertainment assets with Discovery's industry-leading cache of non-scripted programming networks," Keith Snyder at CFRA Research said.

The new company is projected to have 2023 revenue of about $52 billion and adjusted EBITDA of about $14 BN as well as $3 BN in expected annual cost synergies.

The deal is anticipated to close in mid-2022, pending approval by Discovery shareholders and regulatory approvals.

The new company is expected to see $3 BN in cost synergies and has no plans to sell any assets, including CNN.

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