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“AT&T didn’t know what they had been shopping for,” mentioned Brian Wieser, a longtime Wall Road analyst. “The technique underpinning” the acquisition “was in all probability flawed.”
Mr. Wieser mentioned AT&T deserved credit score for slimming down WarnerMedia’s operations and placing cash into HBO Max. Shortly after AT&T closed on the deal in 2018, the corporate rapidly labored to consolidate the media big’s varied divisions, finally shedding about 2,000 staff. “They had been genuinely reorganizing the enterprise to offer it the readability to have the ability to compete with Netflix,” he mentioned.
On the similar time, AT&T is now not greatest positioned to proceed investing in its media enterprise, Mr. Wieser mentioned. The wi-fi big is without doubt one of the most closely indebted firms, with long-term debt topping $159 billion. That features the $23 billion it agreed to spend in February to license further airwaves for its 5G expertise.
A rival cellphone provider, Verizon, has been shedding its media belongings because it, too, has needed to put money into 5G expertise. This month, it offered off Yahoo and AOL to a personal fairness group, not lengthy after it offered HuffPost to BuzzFeed.
John Stankey, the chief govt of AT&T, has checked out its media enterprise as a solution to maintain its telephone prospects glued to its cell service. AT&T Wi-fi subscribers get reductions and free entry to HBO Max. A cope with Discovery may embrace stipulations that will keep these advantages.
Earlier than he took over as chief govt final 12 months, Mr. Stankey was often called the corporate’s chief mergers strategist. However his monitor document has been spotty. Along with planning AT&T’s buy of Time Warner, he was behind the corporate’s $48 billion acquisition of the satellite tv for pc operator DirecTV in 2015. The service has been bleeding prospects for years; in February, AT&T offered a part of the enterprise to the non-public fairness agency TPG for about $16 billion, a 3rd of what it initially paid.
For Discovery, the deal may lastly give Mr. Zaslav the scale and scale he has lengthy sought. A swashbuckling govt who can recall rankings figures off the highest of his head, Mr. Zaslav represents the final of the previous guard in media, a hobnobbing mogul recognized for internet hosting lavish get-togethers at his home within the Hamptons.
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