AT&T (T Quick QuoteT - Free Report) and Discovery have agreed to combine their media assets to create a new publicly traded enterprise. Discovery’s CEO, David Zaslav, will run this new company, and 71% of the control will be held by AT&T shareholders, while Discovery stockholders will have a 29% stake.

AT&T is rolling off its WarnerMedia assets, which it had purchased less than 3 years ago in the $81 billion acquisition of Time Warner. There have been concerns about the magnitude of leverage that this deal had put on AT&T’s balance sheet.

AT&T’s new CEO, John Stankey, is reversing his predecessor’s attempt to create a media conglomerate and focus on its wireless business and the 5G revolution.

AT&T will be receiving $43 billion from this deal in cash, fixed income securities, and roll-off of certain WarnerMedia debts. Stankey is reversing moves made by its prior CEO to deleverage the company and turning AT&T back into a pureplay broadband business.

Investors were excited on both end of this deal, with T and DISCA rallying 3% & 9.5%, respectively, this morning, but as the trading day went on DISCA dipped into the red.

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