AT&T Stocks Fall Nearly 5% as the Company Reveals Its Warner Bros. Discovery Strategy AT&T announced the merger between WarnerMedia and Discovery last May, but some details of the deal weren't released until Tuesday.

By Chloe Arrojado


On Tuesday, telecommunications company AT&T announced its plans to spinoff WarnerMedia in a $43 billion transaction to merge its media properties with Discovery. The move will also cut its dividend by nearly half, going from $2.08 to $1.11 per share.

"In evaluating the form of distribution, we were guided by one objective — executing the transaction in the most seamless manner possible to support long-term value generation," AT&T CEO John Stankey said in the release. "We are confident the spin-off achieves that objective because it's simple, efficient and results in AT&T shareholders owning shares of both companies, each of which will have the ability to drive better returns in a manner consistent with their respective market opportunities."

The release detailed that each AT&T shareholder will receive an estimated 0.24 shares of the new Warner Bros. Discovery (WBD) stock for each share of AT&T stock they own. AT&T shareholders will own 71% of the new company after the transaction closes in the second quarter.

AT&T's plans follow up the announcement it made last May, when it first announced its $43 billion deal to merge WarnerMedia with Discovery. However, some financial details were not disclosed by the company until the Tuesday announcement.

Related: AT&T Offloads Media Division, Announces Mega-Merger With Discovery, Inc.

In AT&T's May press release, the telecommunications brand wrote that it was considering a number of moves: a spinoff, in which shareholders receive a cash dividend or some ratio of WBD shares for each share of AT&T owned, a split-off, where shareholders choose to keep existing AT&T shares or exchange them for WBD shares, or some combination of the two options.

By choosing a spinoff, Stankey says the move "will let the market do what markets do best," rather than attempt to account for market volatility in the near term.

"We believe that the remaining AT&T and the new WBD are two equities that the market will want to own and the markets to support those equities will develop," Stankey said in the February release. "We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent."

AT&T shares fell nearly 5% at the open and are down 4.18% over a 24-hour period as of 11:35 a.m.

Related: AT&T May Offer Investors a Gift That Goes Beyond its Juicy Dividend

Chloe Arrojado

Entrepreneur Staff

Editorial Assistant

Editor's Pick

Related Topics

Business Models

A Company With a Conscience — How to Make High-Priced Products Accessible to Working-Class Families

Some products are inherently expensive. Companies can offer leasing programs, financing options and other marketing approaches to make them accessible to working families.

Growing a Business

How to Get Your Business Noticed (and How to Brag About It)

Knowing how to go after important recognition awards and then leverage them can have a long-term impact on your business.


What's the Best Social Media Influencer Option for Your Business?

The success of an entire marketing campaign involving influencers hinges on the meticulous selection of the right social media blogger. Do you know how to choose the right one?


7 Reasons Why CEOs Need to Develop a Personal Brand — and How to Build One.

Here's why crafting a captivating personal brand and origin story is pivotal in today's landscape and how these seven tangible advantages can redefine your success as a business leader.

Science & Technology

ChatGPT Is Powerful — and Can Wreak Havoc If You Don't Know Its 5 Fatal Flaws

There's no denying that ChatGPT is powerful. It should, however, be used with an awareness of its limitations to maximize its potential.