The $43 billion merger will see the creation of Warner Bros Discovery, in which AT&T will hold a 71% stake
In October 2016, AT&T announced that it would purchase Time Warner for $85.4 billion, saying at the time that the deal would generate synergies of $1 billion a year within three years of closing.
Since then, however, efforts to combine content and distribution as a single vertically integrated company have yielded underwhelming results, leading AT&T to announce its intention to merge the renamed WarnerMedia with Discovery in May last year.
The deal, worth roughly $43 billion, would see AT&T own 71% of the newly created Warner Bros Discovery, while Discovery would own the remainder.
WarnerMedia includes companies such as CNN, HBO, and Warner Bros, while Discovery is best known for the Discovery Channel, Animal Planet, and TLC.
The merger is currently expected to be completed in the middle of 2022.
Today, AT&T has announced that it will spin off WarnerMedia as part of the merger, with AT&T shareholders to receive 0.24 shares of Warner Bros Discovery for each AT&T share they own.
"Rather than try to account for market volatility in the near-term and decide where to apportion value in the process of doing an exchange of shares, the spin-off distribution will let the market do what markets do best," AT&T CEO John Stankey.
"We are confident both equities will soon be valued on the solid fundamentals and attractive prospects they represent."
As part of the announcement, AT&T said it would slash its dividend, down to $1.11 a share from $2.08.
The news comes at a time for financial strain for AT&T, with the company having shelled out over $45 billion for 5G spectrum over the last two years, as well as having plans to invest around $20 billion in fibre-to-the-home (FTTH) across the US in 2022.