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How the AT&T Spinoff Has Complicated Trading in Its Stock

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Photograph by Mike Mozart

Trading in


stock on Monday may confuse some investors, because the base share price has been adjusted to reflect the closing on Friday of the merger of AT&T’s WarnerMedia business with Discovery.

 Holders of AT&T (ticker: T) received roughly a 0.242 share of

Warner Brothers Discovery (WBD), as the merged media company will be known, for each AT&T share in the spinoff.

The value of that Warner Brothers Discovery stock, which stood at roughly $5.90 per AT&T share based on Discovery’s closing price of $24.43 on Friday, was deducted from the closing price of AT&T’s stock on Friday to figure out the new base level for the AT&T shares.

AT&T shares were trading at $18.69 in pre-market trading. That’s up about 2% from the adjusted closing on Friday. AT&T ended Friday at $24.14 before the adjustment for the spinoff.

In pre-market trading, Warner Brothers Discovery was trading up slightly, at $24.60.

The combined value of the AT&T stock plus the fractional value of the Warner Brothers Discovery stock equaled the value of where AT&T was trading Friday before any moves Monday.

AT&T’s new dividend yield is about 5.9% based on its new annual payout of $1.11.

AT&T management has been eager for the deal to close to focus on the company’s core telecom operations.

One issue will be what AT&T shareholders do with the Warner Brothers Discovery stock. A large portion of AT&T holders—an estimated 45% to 50%–are retail investors.

Some may not want to hold a stock like Warner Brothers Discovery, which hasn’t paid a dividend when under the Discovery banner. It isn’t expected that the new company will pay a dividend. Some AT&T holders may sell Warner Brothers Discovery stock to buy more AT&T shares.

In its 2022 10-K report released in February, Discovery said: “We have not paid any cash dividends on our Series A common stock, Series B common stock or Series C common stock, and we have no present intention to do so.”

The three classes of Discovery stock were merged into a single class of Warner Brothers Discovery as part of the transaction.

In a press release Friday, AT&T noted that its holders received “1.7 billion shares of WBD, representing 71% of WBD shares on a fully diluted basis. Discovery’s existing shareholders own the remainder of the new company. In addition to their new shares of WBD common stock, AT&T shareholders continue to hold the same number of shares of AT&T common stock they held immediately prior to close.”

Write to Andrew Bary at

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