Jason Kilar appears to be on his way out as chief executive of WarnerMedia, which is being spun off along with other AT&T (T) - Get AT&T Inc. Report entertainment assets into a merged entity with Discovery (DISCA) - Get Warner Bros Discovery Inc Com Ser A Report.
Kilar has enlisted lawyers to negotiate his exit from the position, two knowledgeable sources told The New York Times. The new company will be run by Discovery Chief Executive David Zaslav.
Even as the deal purges debt from AT&T, the shares recently traded at $31.94, down 0.9%.
AT&T has risen 10% in the past six months, lagging the S&P 500’s 15% gain, thanks to the debt -- AT&T is the world’s most heavily indebted non-financial company -- and its fading cable and satellite TV business.
Discovery recently traded at $33.61, down 5.7%. It has slid 29% in the past three months, as lenders to the troubled hedge fund Archegos had to sell off shares.
TheStreet.com Founder Jim Cramer says the AT&T-Discovery deal represents an attractive opportunity to sell AT&T shares.
Meanwhile, AT&T will cut its payout ratio by more than 20 percentage points in the wake of the Discovery deal, the company indicated Monday, crashing out of the list of so-called dividend aristocrats.
AT&T said its dividend payout ratio, which was around 63% in the previous quarter, will be resized to account for the distribution of WarnerMedia assets into a new company.
The remaining AT&T assets will aim to give holders a dividend-payout ratio of between 40% and 43%, the company said, based on expected free cash flow of around $20 billion.