Not so long ago, AT&T was promoting the idea that combining content producer Time Warner with AT&T’s telco distribution capabilities would make for a global powerhouse, but the claim now seems to be that hiving off Warner Media and creating two independent companies will make for capital structure improvement on AT&T’s side and “sharpen the investment focus” by focusing interest on either media or telecommunications. For the merger, AT&T would also receive $43 billion in cash, debt securities, and WarnerMedia’s retention of certain debt. Discovery) while Discovery shareholders would receive stock amounting to 29 per cent. Under the terms of the deal, AT&T shareholders would get stock representing 71 per cent of the new company (to be called Warner Bros. In a bid to compete with streaming giants like Netflix and Disney, AT&T announced last month a plans to combine its content business WarnerMedia, bought just three years ago for $85 million, with Discover. “But certainly for those people who bought it only for the dividend, I guess this transaction’s a bit disappointment,” he said. “So, there’s an argument abroad that AT&T will stop being a yield stock and start being some sort of hybrid of yield and growth as a result of this transaction.” “The AT&T dividend which was something on the order of seven and a half percent is probably going to be cut in half,” said Baskin, speaking on BNN Bloomberg on Friday. AT&T ( AT&T Stock Quote, Chart, News, Analysts, Financials NYSE:T) shareholders may ultimately see upside from the proposed Discovery merger and spinoff deal but for those investors holding onto AT&T for its hefty dividend, the disappointment could be too much, says Baskin Wealth Management president David Baskin.
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