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The planned merger of Discovery and AT&T’s WarnerMedia has cleared the U.S. antitrust hurdle, Discovery said in a regulatory filing on Wednesday.
The news marks a major step for the megadeal, which telecom giant AT&T recently said is expected to close in the second quarter. Discovery shareholder approval for the transaction is the last major outstanding green light, but it is widely expected as the company previously secured support for the deal from major shareholders John Malone and Newhouse. AT&T doesn’t need shareholder approval for the merger.
As of Wednesday, “Discovery Inc. and AT&T Inc. have satisfied the closing condition … of the agreement and plan of merger, dated as of May 17, 2021, by and among Discovery, AT&T, … relating to the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976,” Discovery said in a regulatory filing. “The HSR Act statutory waiting period has expired or otherwise been terminated, and any agreement not to consummate the transaction between the parties and the Federal Trade Commission (FTC) or the Antitrust Division of the United States Department of Justice (DOJ) or any other applicable governmental entity, has also expired or otherwise been terminated.”
Under the Hart-Scott-Rodino Act, companies are required to provide the FTC and DOJ advance notice of mergers with a certain minimum deal value. In transactions where either the FTC or the DOJ sees the potential for significant anticompetitive consequences, either agency may require the merger parties to submit more background information to decide whether to sue to block a proposed deal.
Late last year, several congressional Democrats had expressed antitrust worries, leading observers to describe the passing of the waiting period without attempts to block the deal as its biggest potential hurdle. “This transaction raises significant antitrust concerns,” wrote Democratic members of Congress, including Senator Elizabeth Warren and Congresswoman Alexandria Ocasio-Cortez, in a letter to U.S. Attorney General Merrick Garland and Justice Department antitrust chief Jonathan Kanter.
The European Commission, the executive body of the European Union, approved the deal in December.
Having avoided any formal antitrust challenge, the Discovery and WarnerMedia teams can now begin to prepare for the combination. Among key decisions Hollywood and Wall Street will focus on are executive appointments, potential cost-cutting moves and the unveiling of Warner Bros. Discovery’s streaming strategy.
In May, Discovery unveiled the proposed megamerger with WarnerMedia, with Discovery CEO David Zaslav to serve as CEO of the new company, which will be called Warner Bros. Discovery. AT&T and Discovery combining their media and entertainment assets into a combined sector giant will bring together TV channels like CNN, TBS, TNT, HGTV, Food Network and Discovery Channel, the Warner Bros. film studio, and streaming services HBO Max and Discovery+.
The merged giant’s planned stock symbol is “WBD,” which will trade on the Nasdaq. Zaslav has said he will move to Los Angeles to run the new company, which is seen as big enough to take on the likes of Disney and Netflix in the global streaming wars.
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