WARNER BROS. DISCOVERY, INC. Item 1.01. Entry into a Material Definitive Agreement.
Transaction Documents
In connection with the Transactions, on the Closing Date, the Company, AT&T andSpinco and certain of their subsidiaries, as applicable, entered into additional agreements, including:
• a Transition Services Agreement (the "TSA") by and between
Inc. and
obligations with respect to the provision of certain transition services.
The scope of services to be provided under the
term and fees for each such service, are set forth in the
which were finalized prior to the completion of the Transactions. The
fees for the
profit margin (including employee costs related thereto) and include any
additional reasonable, documented out-of-pocket costs or expenses
incurred by the applicable service provider or its affiliates and
directly related to the provision of such service; and
• an Intellectual Property Matters Agreement (the "IPMA") by and among
AT&T, Spinco and certain of their affiliates, pursuant to which, among
other things, AT&T and Spinco and certain of their affiliates granted
each other non-exclusive, royalty-free, irrevocable and perpetual
cross-licenses (1) to use technology
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owned by or, to the extent sublicensable, licensed to either AT&T or
Spinco , and used in the other party's business in the 12-month period
prior to the Closing Date, in substantially the same manner as such
technology was used prior to the Closing Date, (2) under certain
scheduled patents for which the named inventors include at least onethe relevant invention was conceived or reduced to practice during such
employees' period of employment, for any and all purposes and (3) to use
business information and data generated by AT&T prior to the Closing
Date, for or on behalf of
Business (as defined in the IPMA) (excluding personal information and
information and data regarding customers or subscribers of products orservices of AT&T) in substantially the same manner as such information or
data was used prior to the Closing Date.
. . .
Item 2.01. Completion of Acquisition or Disposition of Assets.
On the Closing Date, the Transactions, including the Merger, were completed pursuant to the Merger Agreement and the Separation Agreement. At the effective time of the Merger, each issued and outstanding share ofSpinco common stock (except for shares ofSpinco common stock held bySpinco as treasury stock or by any subsidiary ofSpinco after giving effect to the Separation, which were canceled and ceased to exist and no consideration was delivered in exchange therefor) was automatically converted into the right to receive 0.241917 shares of WBD common stock (or cash payment in lieu of fractional shares), based on the exchange ratio set forth in the Merger Agreement. Under the Merger Agreement, exchange ratio means (1)(a) the number of shares WBD common stock outstanding as of immediately prior to the effective time of the Merger on a fully diluted, as-converted (including as a result of the Reclassification) and as-exercised basis in accordance with the treasury stock method multiplied by (b) the quotient of 71 divided by 29 divided by (2) the number of shares ofSpinco common stock outstanding immediately prior to the effective time of the Merger, subject to the adjustments set forth in the Merger Agreement. The calculation of the number of shares of WBD common stock to be issued to holders of record of shares ofSpinco common stock immediately prior to the effective time of the Merger (the "Share Issuance"), as set forth in the Merger Agreement, resulted inSpinco stockholders immediately prior to the Merger collectively holding approximately 71% of the outstanding shares of WBD common stock on a fully diluted basis immediately following the Merger. The Company determined that there were approximately 707 million shares of WBD common stock outstanding immediately prior to the effective time of the Merger on a fully diluted, as-converted and as-exercised basis (including as a result of the Reclassification). The total shares of WBD common stock issued in the Share Issuance therefore equaled the product of (1) approximately 707 million multiplied by (2) a fraction, the numerator of which is 71% and the denominator of which is 29%, which equals approximately 1.7 billion shares of WBD common stock. Immediately prior to the effective time of the Merger, the number of shares ofSpinco common stock issued and outstanding equaled approximately 7.2 billion. As a result, the exchange ratio in the Merger was equal to 0.241917. Immediately after the completion of the Transactions, giving effect to the Reclassification and the Merger, the Company had a total of 2,426,605,846 . . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangements or Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K under the heading "Financing Matters" is incorporated by reference into this Item 2.03.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On the Closing Date, in connection with the completion of the Transactions, the
Company notified the Nasdaq Global Select Market ("Nasdaq") of the completion of
the Transactions and requested that Discovery Series A common stock, Discovery
Series B common stock and Discovery Series C common stock be withdrawn from
listing on Nasdaq. On the Closing Date, Nasdaq filed notifications of removal
from listing on Form 25 with the SEC to report the delisting of Discovery Series
A common stock, Discovery Series B common stock and Discovery Series C common
stock from Nasdaq and suspended trading of such series of Discovery stock on
Nasdaq prior to the opening of trading on April 11, 2022 . The delisting of such
series of Discovery stock will become effective on April 18, 2022 , ten days
after the filing date of the Form 25. On April 11, 2022 , WBD common stock
commenced trading on Nasdaq.
Item 3.03. Material Modifications to Rights of Security Holders.
On the Closing Date, prior to the effective time of the Merger, the Company amended and restated the Discovery Charter to effect the Reclassification and the other changes approved by Discovery's stockholders at a special meeting of stockholders onMarch 11, 2022 . At the effective time of the WBD Charter, (1) each share of Discovery -------------------------------------------------------------------------------- Series A common stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into one share of WBD common stock, (2) each share of Discovery Series B common stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into one share of WBD common stock, (3) each share of Discovery Series C common stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into one share of WBD common stock, (4) each share of Discovery Series A-1 preferred stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into 13.11346315 shares of WBD common stock and (5) each share of Discovery Series C-1 preferred stock issued and outstanding or held by Discovery as treasury stock immediately prior to such effective time was automatically reclassified and converted into such number of shares of WBD common stock as the number of shares of Discovery Series C common stock such share of Discovery Series C-1 preferred stock would have been convertible into immediately prior to such effective time, which as of immediately prior to such effective time would have been 19.3648 shares of WBD common stock. The information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03. In addition, the Discovery Registration Statement sets forth certain additional information regarding the rights of the Company's stockholders before and after the completion of the Transactions in the sections titled "Description of Capital Stock of Discovery and WBD" and "Comparison of Stockholders' Rights" and is incorporated by reference into this Item 3.03. The foregoing description does not purport to be complete and is qualified in its entirety by reference to each of the WBD Charter and the WBD Bylaws (as defined below), copies of which are attached hereto as Exhibits 3.1 and 3.2, respectively, and incorporated by reference into this Item 3.03.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Departure and Election of Directors
In accordance with the terms of the Merger Agreement, the WBD Charter and the Consent Agreement (as defined in the Merger Agreement), as of the effective time of the Merger, (1) the board of directors of the Company (the "Board") increased the size of the Board to 13 directors, (2) the directors on the Board immediately prior to the completion of the Merger resigned from the Board and from all committees of the Board on which each such resigning director served and (3)David M. Zaslav ,Robert R. Bennett ,John C. Malone ,Paul A. Gould ,Steven A. Miron andSteven O. Newhouse , Discovery's designees pursuant to its rights under the Merger Agreement, andSamuel A. Di Piazza , Jr.,Li Haslett Chen ,Paula A. Price ,Richard W. Fisher ,Fazal Merchant ,Debra L. Lee andGeoffrey Y. Yang , AT&T's designees pursuant to its rights under the Merger Agreement, were elected to the Board.
Pursuant to the WBD Charter, the Board is divided into three classes, designated Class I, Class II and Class III. Effective as of the effective time of the Merger, the directors identified below were designated to the following classes:
Class I:
Class II:
Class III:
Effective as of the effective time of the Merger, the directors identified below were appointed and designated to the following committees of the Board:
Audit Committee:
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Compensation Committee:
Nominating and Corporate Governance Committee:
Biographical information and other arrangements of the Company's directors are included in the Discovery Registration Statement in the section titled "The Transactions-Board of Directors and Management of WBD Following the Transactions", which is incorporated by reference into this Item 5.02.
Appointment of Officers
In connection with the completion of the Transactions, onApril 11, 2022 , the following individuals were elected as officers of the Company as set forth in the table below:Name TitleDavid M. Zaslav President and Chief Executive OfficerAdria Alpert Romm Chief People and Culture OfficerBruce L. Campbell Chief Revenue and Strategy OfficerGunnar Wiedenfels Chief Financial OfficerDavid Leavy Chief Corporate Affairs Officer
Gerhard Zeiler President, International Savalle Sims Executive Vice President, General CounselLori Locke Executive Vice President, Chief Accounting Officer . . .
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On the Closing Date and prior to the effective time of the Merger, the Company
amended and restated the Discovery Charter to, among other things, (1) change
its name to Warner Bros. Discovery, Inc. , (2) effect the Reclassification and
(3) effect the other changes approved by Discovery's stockholders at a special
meeting of stockholders on March 11, 2022 . Information about the other
amendments to the Discovery Charter is included in the Discovery Registration
Statement in the section titled "Information about the Discovery Special
Meeting-Charter Amendment, Share Issuance and "Golden Parachute" Compensation
Proposals", which is incorporated by reference into this Item 5.03.
On the Closing Date, the Company also amended and restated its amended and restated bylaws (as amended and restated, the "WBD Bylaws") to, among other things, reflect the WBD Charter.
Each of the foregoing descriptions does not purport to be complete and is qualified in its entirety by reference to each of the WBD Charter and the WBD Bylaws, respectively, copies of which are attached hereto as Exhibits 3.1 and 3.2, respectively, and incorporated by reference into this Item 5.03.
Item 5.07. Submission of Matters to a Vote of Security Holders.
On
1. Stockholders elected each of the Company's six nominees for director, three elected by the holders of shares of Discovery Series A common stock and Discovery Series B common stock voting together as a single class, and three elected by the holders of shares of Discovery Series A-1 preferred stock voting separately as a class, as set forth below:
Director Nominees Elected by Holders of Shares of Discovery Series A Common Stock and Discovery Series B Common Stock as Class I Directors
Name Votes For Votes Withheld Broker Non-Votes
Director Nominees Elected by Holders of Discovery Series A-1 Preferred Stock
Name Votes For Votes Withheld Broker Non-Votes Robert J. Miron 70,673,242 0 0 Steven A. Miron 70,673,242 0 0 Susan M. Swain 70,673,242 0 0
2. Stockholders ratified the selection of
Votes For Votes Against Abstentions 269,323,577 1,475,894 86,612
3. Stockholders approved the Omnibus Incentive Plan as set forth below:
Votes For Votes Against Abstentions Broker Non-Votes 217,578,321 27,761,840 251,563 25,294,359
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Item 7.01. Regulation FD Disclosure.
On the Closing Date, the Company and AT&T issued a joint press release announcing the completion of the Transactions, furnished as Exhibit 99.1 hereto.
The information in this Item 7.01, including Exhibit 99.1 attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Item 8.01. Other Events. Change of Ticker Symbol In connection with the completion of the Transactions, Discovery Series A common stock, Discovery Series B common stock and Discovery Series C common stock ceased trading on Nasdaq under the ticker symbols "DISCA", "DISCB" and "DISCK", respectively, after the close of trading on the Closing Date. OnApril 11, 2022 , WBD common stock commenced trading on Nasdaq under the ticker symbol "WBD".
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The financial statements required by this item will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date on which this Current Report on Form 8-K must be filed.
(b) Pro forma financial information.
The financial statements required by this item will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date on which this Current Report on Form 8-K must be filed. (d) Exhibits Exhibit Number Description 2.1 Agreement and Plan of Merger, dated as ofMay 17, 2021 , by and among AT&T Inc.,Magallanes, Inc. ,Discovery, Inc. and Drake
(incorporated by reference to Exhibit 2.1 of Discovery, Inc.'s Current
Report on Form 8-K filed on May 20, 2021 ).
2.2 Separation and Distribution Agreement, dated as of May 17, 2021 , by
and among AT&T Inc., Magallanes, Inc. and Discovery, Inc. (incorporated
by reference to Exhibit 2.2 of Discovery, Inc.'s Current Report on Form
8-K filed on May 20, 2021 ).
3.1 Second Restated Certificate of Incorporation of Warner Bros.
Discovery, Inc.
3.2 Amended and Restated Bylaws of Warner Bros. Discovery, Inc.
4.1 Twentieth Supplemental Indenture, dated as of April 8, 2022 , by and
among Discovery Communications, LLC , Warner Bros. Discovery, Inc. ,
Magallanes, Inc. and U.S. Bank Trust Company , NationalAssociation, as
trustee.
4.2 Twenty-First Supplemental Indenture, dated as of April 8, 2022 , by
and among Discovery Communications, LLC , Warner Bros. Discovery, Inc. ,
Magallanes, Inc. and U.S. Bank Trust Company , NationalAssociation, as
trustee.
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4.3 Indenture, dated as ofMarch 15, 2022 , by and amongMagallanes, Inc. , AT&T Inc. andU.S. Bank Trust Company, National Association , as Trustee. 4.4 First Supplemental Indenture, dated as ofApril 8, 2022 , by and amongMagallanes, Inc. , Warner Bros.Discovery, Inc. ,Discovery Communications, LLC ,Scripps Networks Interactive, Inc. , andU.S. Bank Trust Company, National Association , as Trustee. 4.5 Registration Rights Agreement, dated as ofMarch 15, 2022 , by and amongMagallanes, Inc. ,J.P. Morgan Securities LLC andGoldman Sachs & Co. LLC . 4.6 Amended and Restated Registration Rights Agreement, dated as ofApril 11, 2022 , by and amongDiscovery, Inc. ,Advance/Newhouse Partnership andAdvance/Newhouse Programming Partnership . 10.1 Transition Services Agreement, dated as ofApril 8, 2022 , by and betweenAT&T Services, Inc. andMagallanes, Inc. * 10.2 Intellectual Property Matters Agreement, dated as ofApril 8, 2022 , by
and among AT&T Inc.,
Inc.*†
10.3 Credit Agreement, dated as of
Inc., the lenders named therein and JPMorgan Chase Bank, N.A ., as agent.
10.4 Credit Agreement, dated as of June 9, 2021 , by and among DiscoveryCommunications, LLC ,Discovery, Inc. , as facility guarantor,Scripps Networks Interactive, Inc. , as subsidiary guarantor, the lenders from
time to time party thereto and
agent, swing line lender and L/C issuer (incorporated by reference to
Exhibit 4.1 of Discovery, Inc.'s Current Report on Form 8-K filed on
June 10, 2021 ).
10.5 Second Amended and Restated Receivables Purchase Agreement, dated as
of
persons from time to time party thereto,
Turner Broadcasting System, Inc. andPNC Capital Markets LLC .* 10.6 Performance Guaranty, dated as ofApril 7, 2022 , byDiscovery, Inc. 10.7 Warner Bros.Discovery, Inc. Stock Incentive Plan. 99.1 Joint Press Release of AT&T Inc. andDiscovery, Inc. , datedApril 8, 2022 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Exhibits, schedules and annexes have been omitted pursuant to Item 601(a)(5) of
Regulation S-K and will be supplementally provided to the
† Certain provisions of this exhibit have been omitted pursuant to Item
601(b)(10)(iv) of Regulation S-K and will be supplementally provided to the
upon request.
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