US telecoms giant AT&T is reportedly close to striking a deal with Discovery that would create a $150 billion streaming giant.
A tie-up would bring one of Hollywood’s biggest studios and Discovery’s channels under the same ownership.
AT&T owns CNN, HBO and Warner Bros, after acquiring many brands in a $108.7billion purchase of Time Warner in 2018.
The deal would mark the entry of another player into a crowded market.
“This is a streaming arms race and AT&T is making an offensive strategic move to further bulk up its content in the battle versus Netflix, Disney, and Amazon,” said Wedbush Securities Dan Ives.
“The Time Warner acquisition and the golden jewel HBO asset was the first step with Discovery – a doubling down on this streaming endeavour,” he added.
However, David Cummings, chief investment officer at Aviva, said that shareholders may be uneasy about the deal.
He agreed that AT&T, in the face of huge streaming competition, needed to increase its amount of content, but added: “The market might feel this deals is a bit too late; I expect the market might be a little sceptical.”
The merger would create a new business that would be separate from AT&T and could be valued at $150billion, including debt, reported the Financial Times.
Discovery’s market value, including debt, currently stands at around $30billion.
The deal would put together movie-making powerhouse Warner Bros. Entertainment, which is home to the Harry Potter and Batman franchises, and Discovery’s stable of unscripted home, cooking, nature and science shows.
WarnerMedia-owned HBO and HBO Max now have around 64million subscribers worldwide.