19 slides from Warner Bros. Discovery, Inc. - Series A's merger presentation, May 17, 2021
Slide 1: Discovery and WarnerMedia to Combine
Discovery and WarnerMedia to Combine May 17, 2021 © 2021 AT&T Intellectual Property. AT&T and AT&T Globe logo are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. Exhibit 99.3
Slide 2: Call Participants
Call Participants John Stankey Chief Executive Officer, AT&T Pascal Desroches Chief Financial Officer, AT&T David Zaslav President and CEO, Discovery Dr. Gunnar Wiedenfels Chief Financial Officer, Discovery
Slide 3: Cautionary Language Concerning Forward-looking Statements
Cautionary Language Concerning Forward-looking Statements Information set forth in this communication, including financial estimates and statements as to the expected timing, completion and effects of the proposed transaction between AT&T, Magallanes, Inc. (“Spinco”), and Discovery, Inc. (“Discovery
Slide 4: AT&T to merge WarnerMedia with Discovery
AT&T to merge WarnerMedia with Discovery 4 WarnerMedia and Discovery to combine operations to create a global entertainment leader David Zaslav to be CEO of new company Transaction Rationale Unlocks significant value for AT&T shareholders Positions Discovery shareholders with enhanced long-term grow
Slide 5: Transaction Summary
Transaction Summary Structured as Reverse Morris Trust transaction, AT&T to spin/split out WarnerMedia1 which will merge into Discovery Discovery to contribute 100% of its business and receive 29% of common equity AT&T will receive $43B (subject to adjustment) in a combination of cash, debt securiti
Slide 6: Discovery + WarnerMedia
† See notes slide for details Presentation title / Month XX, 2021 / © 2021 AT&T Intellectual Property - AT&T Proprietary (Internal Use Only) Discovery + WarnerMedia David Zaslav and Dr. Gunnar Wiedenfels
Slide 7: Combination Significantly Enhances DTC Presence Across Key Criteria
Combination Significantly Enhances DTC Presence Across Key Criteria 7 Better Engagement, Lifetime Value & Subscriber Growth Best in Class Technology & Consumer Experience Marketing Scale & Efficiency Customer Satisfaction Broad Content Genres, Passion Verticals & Deep Library Tentpole Films & Series
Slide 8: Compelling Collection of Personalities, Franchises and IP
Compelling Collection of Personalities, Franchises and IP 8 Largest library with ~200k hours of video content Leading scripted and unscripted content portfolio Available in 220+ countries and territories and 50 languages High quality production capabilities of Warner Brothers studio #1 TV studio by
Slide 9: Enhances Global Linear Business
Enhances Global Linear Business 9 Portfolio positioned as stronger partner to advertising and distribution counterparts Combined company pay TV portfolio reach can compete with combined pay and broadcast network reach of other global players News, sports, scripted and unscripted - combined portfolio
Slide 10: Financial Highlights
Financial Highlights 10 Greater scale with ~$52B of expected revenue and ~$14B of expected adjusted EBITDA† in 2023 Significant synergies with $3+ billion of expected run-rate cost savings Robust FCF† supports deleveraging, reinvestment and financial flexibility Targeting $15+ billion of DTC revenue
Slide 11: Financial Overview
Financial Overview 11 Includes phase-in of synergies assuming mid-2022 closing Based on trailing twelve months adjusted EBITDA assuming mid-2022 closing and excludes synergies Revenue (in $ billions) Adj. EBITDA† (in $ billions) $15B+ of DTC revenue 1 Expected Rapid Deleveraging (Gross Leverage †) 2
Slide 12: AT&T Post Transaction
† See notes slide for details Presentation title / Month XX, 2021 / © 2021 AT&T Intellectual Property - AT&T Proprietary (Internal Use Only) AT&T Post Transaction John Stankey and Pascal Desroches
Slide 13: AT&T Going Forward
AT&T Going Forward AT&T’s Deliberate Market Focus Simplifies AT&T investment thesis and aligns assets with appropriate investor base Focuses our management team to execute on AT&T’s efficiency and effectiveness transformation Provides financial flexibility required to be the leader in broadband conn
Slide 14: AT&T Post Transaction Financial Profile
14 AT&T Post Transaction Financial Profile REVENUES Low single digit % Wireless service and broadband revenue growth ADJ EBITDA†A2 Mid single digit % Strong ROI from Mobility and Fiber investments Mobility and broadband revenue growth and cost transformation ADJ EPS†A3 Mid single digit % EBITDA grow
Slide 15: AT&T Post Transaction Capital Allocation Strategy
15 AT&T Post Transaction Capital Allocation Strategy Attractive Dividend Debt Reduction Investing for Growth Targeting dividend payout ratio†A4 of 40-43% on anticipated free cash flow†A4 of $20B+ $43B net debt reduction at close Expected net debt to adj EBITDA†A5 : 2.6x range after close Below 2.5x
Slide 16: Q&A
| Q8A SAT&I Discovery
Slide 17: Notes
17 Notes A1. CAGR is Compound annual growth rate. A2. EBITDA is operating income before depreciation and amortization. A3. The company (AT&T) expects adjustments to 2021-2024 reported diluted EPS to include merger-related amortization ($4.3 billion for 2021 and approximately $1 billion per quarter i
Slide 18: Transaction Summary
Transaction Summary Structured as an all-stock, Reverse Morris Trust transaction AT&T shareholders to own 71% of new company, Discovery shareholders to own 29% AT&T to receive $43 billion (subject to adjustment) in a combination of cash, debt securities and WarnerMedia’s retention of certain debt Ne
Slide 19: Disclaimers
DISCLAIMERS Cautionary Statement Concerning Forward-Looking Statements Information set forth in this communication, including financial estimates and statements as to the expected timing, completion and e_ects of the proposed transaction between AT&T, Magallanes, Inc. (“Spinco”), and Discovery, Inc.