Investment banks net more than $320m from sale of WarnerMedia to Discovery
Many of the same advisers collected hefty fees when AT&T bought company five years ago
Investment banks netted more than $320m from the sale of AT&T’s WarnerMedia to Discovery, just five years after many of the same advisers made hefty fees from the sale of the media group to the US telecoms company.
AT&T agreed to spin off and merge WarnerMedia with rival Discovery earlier this year at a significantly lower price than it paid to acquire the entertainment group in 2016.
New York-based boutique bank Allen & Co received $75m for its services to Discovery while bankers at JPMorgan earned $15m for advisory work and a further $140m for financing services, according to Discovery’s proxy statement.
WarnerMedia’s advisers included Goldman Sachs, which received $47.8m, and merchant bank LionTree, which earned $43.1m, according to Refinitiv estimates.
Five years earlier, bankers including those at Allen & Co and JPMorgan made $234m after AT&T agreed to buy WarnerMedia — then called TimeWarner — for $85bn, according to Refinitiv.
Allen & Co, a publicity shy firm that has no website, received $50m for advising WarnerMedia on the sale to AT&T while Citigroup and Morgan Stanley netted $50m and $40m, respectively. JPMorgan, Perella Weinberg Partners and Bank of America each made $31.2m from advisory services to AT&T.
AT&T’s senior executives received $9m in bonuses for the acquisition that has now been unpicked.
Wall Street banks have this year enjoyed record fee revenues of above $100bn from advising on mergers and acquisitions thanks to a boom in dealmaking, which surpassed the $5tn mark for the first time.
Media dealmaking has been one of the biggest drivers of the boom as companies race to compete with streaming services such as Netflix. Earlier this year, Amazon bought MGM, the film studio behind James Bond, for $8.5bn.
AT&T’s deal with Discovery, which creates a company with an enterprise value of $132bn, highlights the speed with which traditional media groups are rushing to compete in the streaming wars. The fees generated by investment banks underscore the lucrative rewards on offer for putting together and pulling apart deals for clients.
The transaction, spearheaded by AT&T’s chief John Stankey and Discovery’s David Zaslav, will combine Discovery’s catalogues, which range from nature to history, with prized media assets including the Warner Bros studios, the HBO network behind TV series Succession, and cable television channels including CNN.
JPMorgan, Goldman Sachs and LionTree declined to comment. Allen & Co has no media contact details.