In telecom-segment news that’s bound to shake up the industry, Discovery (NASDAQ:DISCA, DISCB, DISCK) and WarnerMedia are expected to complete their mega-merger as soon as this afternoon. Some of AT&T’s (NYSE:T) stockholders will receive shares of the new company, Warner Bros. Discovery. I highly recommend buying WBD stock as soon as it’s available to you, as the WarnerMedia Discovery merger will produce a digital entertainment giant.
So, here’s the breakdown of what’s happening. First, AT&T will spin off its interest in WarnerMedia. Then, WarnerMedia will merge with Discovery.
Moreover, Discovery common stock shares will “be converted and reclassified into a single share class line of” WBD shares, according to a press release. Those shares will represent the newly formed business, Warner Bros. Discovery.
Both Warner Bros. Discovery and AT&T will remain in the S&P 500. Therefore, we can expect that a number of mutual funds and index funds will be indirectly invested in Warner Bros. Discovery.
As InvestorPlace contributor Larry Ramer explained, some folks who have already owned AT&T shares will be eligible to receive shares (or at least, partial shares) of WBD stock. If this might apply to you, then you’re encouraged to get the details here.
So now, you know what to expect with this spin-off. Yet, this still leaves the question of why you should consider a stake in Warner Bros. Discovery.
Bank of America Research Analyst Jessica Reif said it best: “… this is probably going to be the broadest offering the market has yet to see.” Potentially, the combining of Discovery and Warner Media’s entertainment assets will create a “global media powerhouse.”
Think about it. WarnerMedia’s HBO offers up popular programming such as Mare of Easttown. Meanwhile, Discovery brings inexpensive-to-produce cult hits like Dr. Pimple Popper and 90 Day Fiancé.
Furthermore, HBO Max registered a whopping 9 million downloads in March. This represents eye-popping 142% year-over-year growth.
All in all, Reif believes that the combined company has “the best set of assets.” There’s no denying it: Warner Bros. Discovery is going to be a monster in the telecom sector, in the U.S. and perhaps even globally. Hence, a position in WBD stock, when available, should produce outstanding returns in the long run.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.