As recently reported, AT&T has made the decision to combine two of their supposed crown jewel content creation assets, WarnerMedia and Discovery, to create Warner Bros. Discovery.
Telecom giants continue to attempt to step into the streaming media ring to challenge known and established content farms, Netflix and Disney.
WarnerMedia overseas assets including HBO, CNN, TNT, and TBS television networks, while Discovery is home to the more reality TV based channels like HGTV and the Food Network.
In 2021 AT&T announced that they would be unwinding their $85 billion purchase of Time Warner – a purchase made in 2018 – to focus on their broadband capabilities and to further develop 5G. However, the $43 billion deal that created Warner Bros. Discovery tells another story.
Just last year Verizon sold off both AOL and Yahoo for a total of $5 billion after having purchased the assets in 2015 and 2017, respectively, for a combined cost of $8.9 billion, in an attempt to create their own original content. The move to shed these assets signaled that Verizon was going to refocus on their telecom business and move on from the idea of becoming a major content creating agency.
AT&T’s attempt to be the Cecil B. DeMille of modern broadcasting comes at a significant time. When the pandemic hit, the division’s bottom line took a nosedive when theaters began to close due to quarantines. Now they are scrambling to recoup their losses like many other production companies.
When Verizon originally bought Yahoo, they became the owners of a niche social media platform called Tumblr which was procured by Yahoo for $1.1 billion in 2013 and then sold by Verizon for only $3 million long before Verizon decided to sell Yahoo as a whole.
With Verizon’s purchase of AOL came the Huffington Post – which AOL bought for $315 million in 2011 – but Verizon subsequently sold Huffington Post in 2020 which resulted in a $119 million loss for Verizon according to Variety.
These non-core investments clearly never panned out. It is frustrating to see how executives are making poor decisions time and time again while losing money for shareholders. These resources could have instead been better spent on wage and retiree COLA increases at both companies.
This article was first published in the Spring 2022 Newsletter.
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