The daily business briefing: May 18, 2021
AT&T reaches a deal to merge WarnerMedia with Discovery, Home Depot beats expectations as home splurging continues, and more
AT&T teams up with Discovery to create rival to Netflix, Disney
AT&T on Monday announced it had reached a $43 billion deal to spin off WarnerMedia and combine it with Discovery, creating an entertainment giant combining the HBO Max and Discovery+ streaming services. The new company will have content from WarnerMedia's sports-heavy cable networks TNT and TBS and Discovery's reality-based cable channels, including Oprah Winfrey's OWN, HGTV, the Food Network, and Animal Planet. The deal also includes CNN. Discovery CEO David Zaslav will lead the new company, which The New York Times reports would be "bigger than Netflix or NBCUniversal." This move "positions the new company to be one of the leading global direct-to-consumer streaming platforms," AT&T CEO John Stankey said. The deal is subject to regulatory approval. The companies expect it to take effect in mid-2022.
Home Depot beats expectations as pandemic splurging continues
Home Depot on Tuesday reported quarterly earnings that easily beat analysts' expectations, as Americans continued to spend on upgrades at home even as the coronavirus pandemic eased. Home Depot reported earnings per share of $3.86, beating the $3.08 per share expected by analysts surveyed by Refinitiv. The company reported revenue of $37.5 billion, exceeding the $34.96 billion expected. Home Depot shares rose by more than 2 percent in pre-market trading, adding to gains of more than 20 percent in 2021 so far. The average customers spent per visit rose by 10.3 percent to $82.37. Home Depot has held back on providing guidance for the full year, citing the ongoing uncertainty of the coronavirus crisis.
Amazon reportedly in talks to acquire MGM
Amazon, looking to bring more television and film properties to its streaming service, is in talks to buy Metro-Goldwyn-Mayer Studios, the Los Angeles Times and Variety reported Monday, citing industry sources familiar with the matter. MGM would give Amazon access to the James Bond and Rocky franchises, as well as popular television shows like The Voice and The Handmaid's Tale. The studio has been up for sale since as early as December, the Times reports, and the price being discussed is between $7 billion and $9 billion. Amazon is eager to stay on equal footing with streaming giants Netflix and Disney+, and MGM has 4,000 movies that would be added to its library. The news came as AT&T announced plans to merge WarnerMedia with Discovery to create a streaming powerhouse to compete against Netflix and Disney+.
Monthly Child Tax Credit payments to start in July
About 39 million U.S. households will start receiving monthly Child Tax Credit payments in July, the Treasury Department and IRS announced Monday. The payments will cover more than 65 million children, or about 88 percent of the U.S. population up to age 17, the Biden administration said. Eligible low- and middle-income families will get up to $300 per month for every child under age 6, and $250 a month for those ages 6 to 17. The automatic advance tax credits were included in the coronavirus relief law, the $1.9 trillion American Rescue Plan, passed in March. The package increased the size of the maximum credit, previously $2,000 annually, for one year, and established the advanced payment system.
Stock futures rise after Monday's decline
U.S. stock index futures rose early Tuesday after lingering technology stock weakness dragged Wall Street down at the start of the week. Futures for the Dow Jones Industrial Average were up by 0.3 percent several hours before the opening bell. Those tied to the S&P 500 and the tech-heavy Nasdaq gained 0.3 percent and 0.7 percent, respectively. The Dow fell by 0.2 percent on Monday. The S&P 500 and the Nasdaq dropped by 0.3 percent and 0.4 percent, respectively. Apple, Netflix, and Microsoft all fell by around 1 percent. Tesla lost 2 percent after investor Michael Burry revealed a big bet against the electric carmaker. Growth stocks faced continued pressure due to concerns that rising inflation could prompt the Federal Reserve to tighten monetary policy sooner than expected.