After only a few short years, AT&T looks to be giving up on its ambitious goal to have a media empire. After paying $85 billion in 2018 to acquire TimeWarner and going through an extensive legal battle to make the deal, AT&T looks to be throwing in the towel and “unloading” WarnerMedia onto Discovery for $43 Billion. Excited about the prospect, Discovery has already debuted the new name: Warner Bros. Discovery.
This news comes as a shock in almost every way. It’s no secret that AT&T has struggled with the WarnerMedia brand ever since finalizing the deal. They’ve sold off many of the subsidiaries Warners had purchased over the years and laid off over 500,000 people in order to try and lower the amount of debt they accrued in purchasing the legacy media corporation. When the merger was finalized, many outlets talked about how AT&T was taking a “what have you done for me lately” stance on all of it’s newly acquired subsidiaries, which is no way to run a media conglomerate.
For AT&T, going into their merger, the name of the game was digital. AT&T wanted to put all their eggs into the digital basket, which would start with HBO Max and, rumor has it, would have ended with them abandoning physical media altogether in a few short years. They went head first in the deep end and seem to be disappointed that their corporate meddling didn’t yield immediate positive results. HBO Max was meant to be their major competitor in the streaming competition, and while its found success in recent months with theatrical films releasing day and date on the platform, it appears that AT&T wasn’t getting the success it wanted.
Discovery is an interesting choice, since at first glance they don’t seem like the type of media powerhouse that could afford to take on something as big as WarnerMedia. They are mostly known for their channel and recently launched Discovery+ where they deal with primarily unscripted programming. But, it could be good for WarnerMedia in the long run. Being controlled by a company more familiar with entertainment media and not cell phone coverage might allow for the company to stabilize for the first time in many years.
While the deal with Discovery won’t be finalized for a few months, or even years, it’s going to face some difficult challenges, namely in the eyes of the courts. This deal is happening during a very different political administration than the initial deal with AT&T. In 2016 the Department of Justice tried to fight the initial merger by pointing to antitrust laws and now, the same department can look at this and say “what’s to stop Discovery from selling the company in another three years?” Should the Department of Justice successfully block this merger, AT&T will be stuck with something they no longer want, which could only lead to more bad things for WarnerMedia.
On Discovery’s part, should the Department let this merger happen, they gain access to many subsidiaries and IP that they’ve never had to handle before, and could prove to be overwhelming. But they seem up for the challenge, stating in their press release that they’re excited by the opportunities the new channels and IP will bring. The changes that this will bring will not be seen by consumers right away, and if everything runs smoothly, won’t be seen at all. At the time, many insiders felt that AT&T trying their hand at making content never made sense, so with any luck, this will be a very positive move in the long run.