Finale

AT&T’s big experiment in entertainment is over (it's breaking up with Daenerys)

Tuesday, May 18, 2021 by Snacks

90 Day Fiancé meets GOT... AT&T is ditching the entertainment biz, leaving its media assets to fend for themselves. The telecom giant reached a deal with Discovery to combine their media assets into a new, publicly-traded company (name TBD). Meet the cast...

  • AT&T: Famous for its phone plans, but also for buying WarnerMedia for $81B in 2018. That gave it CNN, HBO, TBS, and Warner Bros. In 2015, it snagged DirecTV.
  • Discovery: Famous for reality shows like Shark Week, Extreme Makeover, and 90 Day Fiancé. Its networks: Food Network, Animal Planet, HGTV, and... Discovery Channel.

Do you think you're better off alone?... If the deal is approved, AT&T will get $43B — around half of what it paid for Warner (womp). AT&T's media biz has struggled thanks to cord-cutting, streaming, and pandemic movie theater closures. In February, it sold a large stake in its DirecTV business. The Warner spin-off marks the end of AT&T's big bet on entertainment — which ended up costing it $93B. Some big plot points:

  • 71%: AT&T shareholders' stake in the new company. Discovery shareholders get the rest.
  • $20B: How much AT&T and Discovery spend on content combined (more than Netflix).
  • Two streaming services: HBO Max and Discovery+. TBD if they'll merge.
THE TAKEAWAY

Losing focus can be dangerous... especially in quickly-changing industries. AT&T lost more than money — it lost focus on wireless, which is going through a 5G revolution. Instead of just competing against Verizon and T-Mobile, AT&T was also competing against Netflix and Disney. Now, it'll need to spend tens of billions to match broadband/wireless investments made by Verizon and T-Mobile to upgrade their networks. This sale would help it do that, but it has already fallen behind.

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