AT&T CEO John Stankey positioned the proposed merger of WarnerMedia and Discovery as letting the organizations — and their traders — much better faucet into the worldwide immediate-to-customer possibility, by separating the media property from the telco.

“I believe, realistically, HBO Max would not be wherever it is currently if not for the strength of the two combined providers,” meaning WarnerMedia and AT&T, explained Stankey, talking Monday at the J.P. Morgan Technology, Media and Communications Meeting. As of the finish of March, HBO Max and HBO merged had 44.2 million domestic shoppers, up 2.7 million from 41.5 million at the conclude of 2020.

That said, Stankey additional, “When you start wanting at the chance to grow a wonderful subscriber base, we kind of seemed at this and [said], ‘It’s time to unleash the media assets’ to seize, you know, the multi-hundred-billion-dollar opportunity” in direct-to-purchaser streaming all over the world.

In accordance to Stankey, what became distinct was that WarnerMedia essential a unique investor foundation and composition that would situation it for international growth. He argued that the tie-up with Discovery does just that, provided the David Zaslav-led nonfiction programmer’s deep library and an existing international footprint. Discovery “brings some of that heft on the worldwide side that is necessary to scale up,” he explained.

The mismatch, he indicated, was that AT&T’s connectivity business enterprise is “kind of captive to the United States for the most past” whereas HBO Max needs to compete on a world-wide basis with Netflix and Disney Moreover. Stankey, although, also defended AT&T’s primary thesis behind the WarnerMedia acquisition — that combining written content and connectivity would reward each sides, by lowering churn and boosting get to.

He was interviewed J.P. Morgan analyst Phil Cusick, who questioned Stankey about how he “reversed approximately six a long time of strategic acquisitions in three months,” referencing the WarnerMedia-Discovery settlement and AT&T’s plans declared in February to spin off DirecTV.

“I contest your characterization that we did that in 3 months,” Stankey replied. “We don’t wake up just one day and say, ‘Hey let’s go uncover a transaction!” According to Stankey, a fair sum of function on the divestitures started even predating his commence in the CEO position in July 2020.

AT&T and Discovery announced the proposed mix of WarnerMedia and Discovery 1 week in the past, on May perhaps 17. Less than the phrases of the pact, AT&T shareholders would hold 71% of the new business, even though Discovery shareholders would very own 29%. The new corporation also will presume credit card debt carried by WarnerMedia. The deal is envisioned to close in mid-2022.

The proposed merger would blend WarnerMedia’s belongings — including HBO Max, Turner and Warner Bros. — with Discovery’s assortment of domestic and worldwide cable channels, like Discovery, TLC, Animal World, Have, Food stuff Network and HGTV.

A reward of the offer for AT&T investors, Stankey claimed, is that they will have the selection to retain ownership in the new streaming-targeted media company or “rotate out” if they would instead place their dollars into a “higher-dividend” stock (like AT&T).

About the merged WarnerMedia-Discovery, Stankey mentioned, “I do believe that they will get around the hump” to establish a truly international and scalable business. AT&T, by distinction, desires to “free up cash” to invest in 5G wi-fi and fiber buildout. “First and foremost, I want to be sure we have the cash flows required to bring out a good broadband product to our purchaser base,” Stankey claimed. “I just imagine the connectivity company is an unbelievable put to be in the next decade.”

Ultimately, AT&T will search at new articles-aggregation options to layer in solutions on best of broadband solutions. But more fast issues for the telco are lowering its personal debt load — it will get $43 billion in funds from the WarnerMedia spin to spend down down and reduce desire expenditures.

All through the session, Stankey also acknowledged that AT&T needs to refine its internet marketing messaging — “What the AT&T brand name indicates has been a minimal obtuse,” he explained — as perfectly as work on its purchaser assistance businesses and “thin down” the value construction.