Why did the stock of AT&T Inc. (T) Drop Today?

After AT&T formally sold its media content business to Discovery, investors sold their shares.
WAN CHAI, Hong Kong - May 1, 2022 - PRLog -- This resulted to the stocks sinking downwards for the rest of the trading day and wrapping up in the red.

T's stock dropped this morning when Discovery Communications announced the completion of its acquisition of WarnerMedia from the telecom giant, resulting in the formation of a new business called Warner Bros. Discovery. As of 11:08 a.m. Eastern Time, T's stock was down 19.2%.

It's not as if investors were unaware that T was selling WarnerMedia to Discovery, the $43 billion deal was disclosed in February but it's evident that some investors no longer see a need to hang on to their stock now that the sale has concluded. This also validated the position of the stock holders regarding the deal and that they see no positive outcome with the said decision.

The Discovery Channel, CNN, HBO and Warner Bros. Discovery are among the prominent content and channels owned by Warner Brothers Discovery. The Discovery+ and HBO Max streaming services, as well as entertainment. On the other hand, T's investors aren't leaving empty handed. They got approximately 0.24 shares of the new Warner Brothers Discovery firm for each share of T's common stock they owned at the time of the deal's conclusion. The split gives T's stockholders 71% control of the newly created firm, while Discovery shareholders will own the remaining 2%.

Rather than focusing on T's media potential, current investors should focus on the company's telephony industry for future development. While the company's stock price plummeted today, it may be easier to swallow given that many of their former investors now own shares in the new Warner Bros. The firm that discovers new things.

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Sue Ramirez
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