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Illustration: Annelise Capossela/Axios

AT&T is in talks with media giant Discovery about merging its media assets, like CNN, TBS and TNT, according to two sources familiar with the discussions.

Why it matters: A potential merger could allow AT&T and Discovery to better compete with entertainment giants like Disney and Netflix in the video streaming wars.

Details: According to Bloomberg, which first reported the news on Sunday, the companies are still figuring out how the deal would be structured.

  • Variety suggests the companies could either combine their assets through a merger, or create joint venture, where they would both own part of the combined new media giant.
  • AT&T recently formed a joint venture with private-equity giant TPG to offload its video assets, including its satellite TV brand DirecTV, its digital skinny bundle service "AT&T TV" and its internet-based TV service "U-Verse."

Be smart: AT&T and Discovery have both launched general entertainment streaming platforms in the past year, but neither HBO Max nor discovery+ come close to the number of subscribers of Disney+ or Netflix.

Data: Company filings; Chart: Axios Visuals

By the numbers: A merged company's subscriber numbers will still pale in comparison to the streaming giants.

  • AT&T reported in January that it had 17.2 million HBO Max "activations." An activation is when someone that pays for its service, actually turns it on and uses it.
  • Activations can come from someone purchasing the HBO Max digital streaming service as a standalone product, or from people who have purchased HBO — the premium cable channel — and have activated their complimentary HBO Max subscriptions.
  • Because AT&T no longer reports "activations"  it's impossible to say just how many people pay for and have activated HBO Max as of today. A fair estimate would be around 20 million people. For now, HBO Max is only available domestically. It will start rolling out globally in June.

Between the lines: A combination of assets could result in a media company worth over $150 billion in enterprise value, per the Financial Times. Discovery today has a market cap of nearly $17 billion. Its value reflects its nearly $12 billion acquisition of Scripps Networks Interactive for in 2018.

  • Discovery has used the content from the lifestyle cable networks it bought from Scripps, like Food Network and HGTV, to build its streaming service, discovery+. It also has international sports rights. It owns Eurosport, the European sports TV network and the GolfTV streaming network.
  • AT&T’s crown jewel is HBO, the cable network if acquired via its acquisition of Time Warner and the namesake of its streaming service, HBO Max. It also owns CNN, worth about $10 billion, as well as other cable channels, like TNT and TBS — both of which have entertainment and live sports. AT&T also owns Warner Bros., the movie studio that sources say is worth around $40 billion.

Catch up quick: Analysts and investors have expressed concerns about AT&T's media strategy, since its $85 billion acquisition of Time Warner in 2018.

  • In late 2019, AT&T faced pressure from activist investor Elliott Management, for not having a clear strategy for its purchase of Time Warner.
  • Other telecom giants, like Verizon, have struggled to make sense of their media assets. Verizon this month sold its media arm, which includes AOL and Yahoo!, for $5 billion to private equity firm Apollo Global Management. It purchased both assets for around $10 billion just a few years earlier.

What to watch: While it’s still unclear how serious talks are between the two companies, some reports suggest the deal could be announced as soon as this week.

Go deeper

The age of the à la carte internet

Illustration: Brendan Lynch/Axios

Media that were once free or easily accessible — including news websites, podcasts, TV shows and games — rushed to get behind paywalls during the pandemic.

Why it matters: This accelerating trend is carving the internet into many niche audiences, Balkanizing our collective media diets.

Aug 10, 2021 - Politics & Policy

Senate passes $1.2 trillion bipartisan infrastructure package

President Biden with Sen. Rob Portman (R-Ohio), Kyrsten Sinema (D-Ariz.) and other bipartisan senators. Photo: Kevin Dietsch/Getty Images

The Senate voted 69-30 on Tuesday to pass the $1.2 trillion bipartisan infrastructure package, handing a major victory to President Biden and a group of senators that spent months negotiating on the agreement.

Why it matters: The monster bill would deliver hundreds of billions of dollars for roads, bridges, waterways and other "hard infrastructure" items. It is widely seen as a victory for both parties and the reputation of the Senate, especially given the current level of polarization in Congress.

1 dead, 14 injured in shooting at Kroger grocery store near Memphis

One person was killed and 14 others were injured Thursday in a shooting at a Kroger grocery store in Collierville, Tenn., near Memphis, the town's spokesperson Jennifer Casey said, per CNN.

What they're saying: "I've been involved in [police work] for 34 years and I have never seen anything like [this]," Police Chief Dale Lane said at a press conference.

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