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Response to Sherman A1 (Reply #4)

Tue May 18, 2021, 04:52 AM

5. Thanks for posting. I was wrong.

Didn't realize the debt burden from the 2018 TimeWarner acquisition weighed so heavily on earnings. Duh.

More from Barron's:

AT&T began the day with a bold announcement and cheers from investors. The stock jumped on news that the company would be spinning off its WarnerMedia assets, combining them with Discovery, leaving AT&T a more concentrated bet on the future of communications. But by Monday afternoon, investors had second thoughts.

AT&T (ticker: T) shares were up as much as 5% Monday morning to a 52-week high before giving back the gains to close down 1.4%. Shares of Discovery (DISCA) reversed an even larger rise and closed down 5.1% Monday.

AT&Tís surprising decision Monday to unwind its media efforts will have broad ramifications for the telecom and content world. For investors, the move will give them distinct ways to play two of the hottest trends in technology: the rollout of 5G and direct-to-consumer streaming.


AT&T shareholders will own 71% of the new company and Discovery shareholders will keep the remaining 29%. AT&T will ultimately reduce its net debt by $43 billion at closing. The all-stock deal will be structured as a Reverse Morris Trust, which means it will be a tax-free transaction in which WarnerMedia is first spun off from AT&T and then combined with Discovery.

MORE: https://www.barrons.com/articles/att-telecom-company-what-means-stock-5g-streaming-51621273800

Analysis of winners and loser by Barron's here: https://www.barrons.com/articles/here-are-the-winners-and-losers-of-the-at-t-warnermedia-discovery-mega-deal-51621280105

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