US telecoms giant AT&T has agreed a deal to combine its media assets, including CNN and HBO, with Discovery, the owner of lifestyle TV networks such as HGTV and TLC.

The deal would mark the unwinding of AT&T’s $108.7bn acquisition of US media conglomerate Time Warner in 2018, and it would underscore its recognition that TV viewership has moved to streaming, where scale is required to take on the likes of Netflix and Disney.

Read more: Hollywood actor Zach Avery arrested over $690m Netflix film scam

Under the terms of the deal, AT&T would receive $43bn in a combination of cash, debt securities and Warner Media’s retention of certain debt.

AT&T’s shareholders would hold a 71 per cent stake in the combined company, while Discovery shareholders would hold 29 per cent.

Discovery currently has a market value including debt of about $30bn.

Discovery president and chief executive officer David Zaslav will lead the new company. It is not clear what role — if any — would be played by Warner Media boss Jason Kilar, who was hired last year to ramp up the company’s streaming push.

The proposed deal would put together one of Hollywood’s most powerful studios, home to the Harry Potter and Batman franchises, with Discovery’s stable of unscripted home, cooking and nature and science shows.

HBO and HBO Max now have 63.9m global subscribers, compared with more than 100m for Disney Plus and 207.6m for Netflix

Discovery, whose portfolio includes Animal Planet and the Discovery Channel, reaches 88.3m homes in the US and has a stake in the soon-to-be-launched GB News to rival the BBC.

Its streaming service Discovery Plus which launched in January has 15m subscribers.

Read more: Beeb rival GB News to launch by summer

But the deal highlights the challenge faced by AT&T since its acquisition of Time Media, which was intended to create a media behemoth combined content and distribution.

The move proved to be costly, with the company racking up a huge debt pile as it also forked out to expand its mobile business.

“The deal is a tacit recognition from AT&T that its lavish acquisition strategy to assemble an empire of media holdings has spectacularly failed to achieve its objectives,” said Kester Mann at CCS Insight.

“AT&T is determined to take on giant streaming providers such as Netflix and Disney, but clearly feels it is unable to take this leap alone as the market for consuming content continues to evolve.”

Analysts said the deal would allow AT&T to focus on its 5G and fibre businesses. It also marks the first step in the consolidation of streaming assets following a tide of new launches.

The deal is expected to close in mid 2022, subject to approval by Discovery shareholders and regulatory approvals.