AT&T merges WarnerMedia with Discovery after reaching agreement

May 18, 2021 15:30

AT&T is an American multinational conglomerate that brings together different segments, ranging from telecommunications to entertainment. It is the largest telecommunications company in the world and one of the largest companies in the world of audiovisual entertainment. Following the purchase of TimeWarner in 2018, which in turn created the WarnerMedia company, the corporation includes subsidiary Warner Bros studios, as well as DC Films and cable television channels such as HBO, CNN, TNT and Cartoon Network.

Yesterday, AT&T announced that it had reached an agreement to merge its entertainment division as Discovery in order to create a new company that would bring together all the television channels of both operators, thus creating one of the largest libraries in the entertainment world, with more than 200,000 hours of programming and 100 brands. This operation is valued at $43 billion, of which AT&T will obtain 71% of the shares of the new company.

This new company would have a total of 79 million subscribers worldwide across its streaming services, of which HBO Max contributes a total of 64 million users. While such figures remain far from the levels of Netflix or Disney +, this new merger stiffens the competition in this sector, as its newly boosted catalog could attract new subscribers.

On April 22, AT&T presented its quarterly results where we could observe that it obtained a profit per share of $0.86 along with revenues of $43.94 billion, compared to the $0.77 and $42.67 billion expected by the consensus of the market. This continues the positive corresponding results from 2020, and after learning this news the market reacted positively at the start of the day but finally closed the session with a decline of 2.70% due to market rumours around a possible cut in the dividend.

Technically speaking, if we look at the daily chart we can see how during the last sessions, the price was able to overcome the upper band in green of the important lateral channel that has been following the price since the beginning of the pandemic, which acted as its main resistance. However, following yesterday's falls, the price closed below that level again, supported by its 18-session moving average in black.

It is important that we observe the evolution of the price in the next sessions, since if the price manages to maintain this important level of support, it could form a new bullish momentum that definitively breaks the upper band of the lateral channel. On the contrary, if the price loses this level, it could continue its declines to the lower band of the medium-term bullish channel in the area coinciding with its 200-session red average.

Source: Admiral Markets MetaTrader 5. AT&T daily chart. Data range: from September 21, 2018 to May 18, 2021. Prepared on May 18, 2021 at 12:30 CEST. Keep in mind that past returns do not guarantee future returns.

Evolution in the last 5 years:

  • 2020: -26.41%
  • 2019: 36.93%
  • 2018: -26.59%
  • 2017: -8.58%
  • 2016: 23.60%

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