AT&T + Discovery = ?????

By Paul Maxwell Report Archives
Cover image for  article: AT&T + Discovery = ?????

We stream; you stream; we all stream! Can you say "dividend"? AT&T stockholders certainly can!  That pressure plus 5G investment costs are at play in AT&T's rapid restructurings.

Now Dallas-based AT&T is trying to unwind even more very big deals as the once-upon-a-time Southwestern Bell (see below) continues to take hubristic leaps only to fall to the ground … again. This time, the face plant comes in the aftermath of acquiring (in a pretty good fight with former President Trump and his Justice Department) Time Warner Media and then DirecTV. The idea, of course, was to marry big infrastructure monthly bills with the same from lots of cable channels along with a very big bet on an enhanced version of HBO, HBO Max and box office movies.

Oops.

AT&T moved DirecTV to its U-Verse subsidiary to actually run it, keeping an ownership share and redirecting some cash. U-Verse had added streaming AT&T TV, but that stumbled. HBO Max costs real investments and catching up with Netflix and/or Disney is a big reach with one stream!

The dividend coupled with 5G infrastructure costs made it pretty clear what needed to be done.

Enter John Malone, who once sold TCI to the original AT&T (then the long-distance company) for $55B. And with Malone, David Zaslav and Discovery+ came along.

Makes sense.

Just BTW, did anyone notice Zaslav recently bought a house in Beverly Hills?

Now AT&T's John Stankey (Randall Stephenson's successor) is in charge of making sense of it all. He's apparently asking David Zaslav to fix it all with help from John Malone's Liberty and Advance, the Newhouse family vehicle.

Now that, I believe, is a damn good bet. Assembling a roster of streamers from a long list of traditional networks including USA, Cartoon, Eurosport and more looks interesting. The new list will join two growing streamers with opportunities for more targeted streamers … it just makes sense.

Random Notes

Really … Southwestern Bell was once, like Verizon, one of the regional Bell systems which grew out of the breakup of the original American Telephone & Telegraph Company. After SWBell started to grow by overbuilding cable with U-Verse, it bought the AT&T naming rights and grew by adding Bell South and more … like Direct TV, which it unloaded not long ago, reversing retired chairman Randall Stephenson's acquisition expeditions.

From FactSet, mid-May 2021, some market values: Disney/$315+billion; Comcast/$269+B (Has anyone noticed Comcast can actually successfully run both an infrastructure and a media company? No matter the knee-jerk stock 5% hit last Monday.); AT&T/$230+B; Netflix/$218+B; ViacomCBS/$25+B; Discovery/$16+B; AMC Networks/$2+B.

Aww … Leslie Moonves will not get his $120,000,000 from CBS after all.

Watch AT&T double-down on broadband … fiber and 5G.

On a follow-up to my last posting about media groups and backing pro-democracy positions … all pablum; only got through to a couple of groups, not really worth commenting. Meanwhile, the "con"-democracy noise continues at high volume. Though the sort-of-official Republican position seems to be democracy bad but can't talk about it. Only sign of good news was one evangelical's observation that Trump might not be physically able to run.

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