Citi upgrades Discovery to buy, says deal with AT&T is smart for both sides

David Zaslav
Anjali Sundaram | CNBC

A deal with AT&T will give Discovery the scale and firepower to be a major player in the streaming video industry, according to Citi.

AT&T said on Monday it will merge its WarnerMedia business, which includes HBO, with Discovery to create a new stand-alone company.

In anticipation of that announcement, Citi analyst Jason Bazinet upgraded Discovery to buy from neutral, saying in a note to clients that the deal is appealing for shareholders of both companies.