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published in Blogs
May 18, 2021
AT&T (T, $31.39) to cut dividend payout ratio, amid media asset merger with Discovery

AT&T (T, $31.39) to cut dividend payout ratio, amid media asset merger with Discovery

AT&T   will slash its dividend payout ratio by more than 20 percentage points, amid its media asset merger with Discovery .

AT&T said its dividend payout ratio, which was around 63% in the previous quarter, will be "re-sized" to account for the distribution of WarnerMedia assets into a new company. The remaining AT&T assets will intend to give shareholders a dividend payout ratio of between 40% and 43%, based on expected free cash flow of around $20 billion.

AT&T Inc. agreed to spin off its media operations in a deal with Discovery Inc. that will create a new company, merging assets such as CNN and HBO with HGTV and the Food Network. The transaction values the combined entity at about $130 billion including debt, based on WarnerMedia’s estimated enterprise value of more than $90 billion.

As part of the 'Reverse Morris Trust' agreement structure, AT&T shareholders will own 71% of the combined entity. The entity is expected to generate $52 billion in 2023 revenues and a combined subscriber base of nearly 150 million.

 

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