“AT&T didn’t know what they were buying,” said Brian Wieser, a longtime Wall Street analyst. “The strategy underlying the acquisition” was probably flawed. “
Mr Wieser said AT&T deserved to cut down WarnerMedia’s activities and put money into HBO Max. Shortly after AT&T closed the deal in 2018, the company worked quickly to consolidate the media giant’s various businesses and eventually laid off around 2,000 employees. “They really reorganized the business to give it the clarity to compete with Netflix,” he said.
At the same time, AT & T is no longer best positioned to continue investing in its media business, said Wieser. The wireless giant is one of the most heavily indebted companies with over $ 159 billion in long-term debt. That includes the $ 23 billion spent in February on licensing additional radio waves for 5G technology.
A competing wireless operator, Verizon, lost its media resources because it too had to invest in 5G technology. That month, Yahoo and AOL were sold to a private equity group, not long after HuffPost was sold to BuzzFeed.
John Stankey, the executive director of AT&T, has viewed his media business as a way to keep his phone customers on his cellular service. AT&T Wireless subscribers receive discounts and free access to HBO Max. A deal with Discovery could include provisions that maintain these benefits.
Prior to assuming management responsibility last year, Mr. Stankey was known as the company’s chief mergers strategist. But his track record has been blotchy. In addition to planning the acquisition of Time Warner by AT&T, he was involved in the company’s acquisition of satellite operator DirecTV for $ 48 billion in 2015. In February, AT&T sold part of the business to private equity firm TPG for around $ 16 billion, a third of what it originally paid.
For Discovery, the deal could finally give Mr. Zaslav the size and size he has long been looking for. Mr. Zaslav is a bold manager who can remember review numbers. He represents the last of the old guard in the media, a hobby mogul known for holding lavish gatherings at his Hamptons home.
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