What's going on?

US telecoms giant AT&T agreed on Monday to merge its WarnerMedia content business with rival Discovery, in a bid to create a brand new king of the media jungle.

What does this mean?

AT&T only bought WarnerMedia � home to HBO, CNN, and Warner Bros. Entertainment � three years ago. But it�s already planning to spin off the unit into a standalone company which � combined with Discovery�s sports, science, and reality TV empire � could be worth up to $150 billion.

WarnerMedia and Discovery currently have complementary content footprints, and the combined business � 71% of which would be owned by AT&T and 29% of which by Discovery�s current shareholders � would control everything from Superman movies to European Olympics coverage. So if the deal ends up getting the go-ahead from regulators, it�d mean some potent competition for the likes of Disney+ and Netflix�

Why should I care?

The bigger picture: Be skeptical of the hype.

If you think AT&T�s ownership of WarnerMedia sounds short-lived, you�re not wrong. But big merger deals don�t always go to plan, which is why investors � like Discovery�s on Monday � often send their shares down on the back of the announcement (tweet this). In fact, research from management consultancy McKinsey suggests that a lot of small linkups over a longer period tend to add more value than one blockbuster merger.

Zooming out: There are bigger fish to fry.

Netflix may have 208 million subscribers, but AT&T and Discovery�s flagship subscription services � Discovery+ and HBO Max � both grew faster than the streaming frontrunner last quarter. Still, even if these two do join forces, it�ll likely be a long time before they feel confident enough to start cranking up prices on their combined 59 million customers � and even longer before they start turning a profit like the OG streaming platform.