Bloomberg) -- AT&T Inc. fell the most in more than a year as investors digested plans for a smaller dividend payout from the phone giant following the planned merger of its WarnerMedia division with Discovery Inc.
Shares of AT&T fell as much as 7.9% Tuesday in New York, the steepest intraday decline since March 2020. The stock had gained 9.1% so far this year through Monday’s close. Discovery shares fell less than 1% Tuesday to $33.80.
Without the cash flow from WarnerMedia, AT&T said Monday that it will lower its dividend payout ratio to 43% of cash flow. That translates into to about $9 billion annually, down from $15 billion before, according to Colby Synesael, an analyst with Cowen & Co. As part of the deal, AT&T shareholders will own 71% of the combined media company while Discovery investors will get 29%. The parties value the new entity at $130 billion, including debt