After 50,000 Layoffs And Absolute Chaos, AT&T Ends Its Bungled Media Experiment

from the great-job,-Bob dept

You might recall that AT&T spent nearly $200 billion to acquire Time Warner and DirecTV, believing this would turn the dodgy old phone company into an innovative new media juggernaut. But despite $42 billion in tax breaks and oodles of regulatory favors from the Trump administration (like killing net neutrality), AT&T simply couldn’t overcome its own nature as a bumbling, government-pampered telecom monopoly. As a result, the company has laid off more than 52,848 employees since 2017.

The company has also lost more than 8 million TV subscribers since 2017; users who largely fled due to price hikes imposed to help recoup AT&T’s massive merger debt. AT&T also made numerous enemies along the way by reshuffling and shitcanning numerous top executives, gutting numerous brands that were popular with consumers (Mad Magazine, DC’s Vertigo imprint), and generally behaving like a cocky bully in a high school cafeteria despite having clearly no idea what it was actually doing.

After a micro-investor revolt about growing merger debt, AT&T’s now backing out of the media business about as quickly as it came in. After nobody wanted to buy an increasingly useless satellite TV operator, AT&T spun off DirecTV back in March with a value of nearly a quarter of what AT&T paid for it. Now AT&T is also attempting to spin off its media assets in a new combination deal with Discovery that would result in AT&T effectively exiting the media business entirely. Under the deal AT&T gets a little merger debt relief, and the entire operation is spun off into an entirely new entity tasked with competing in the streaming wars with Netflix, Comcast NBC Universal, and Disney.

AT&T’s media effort will go down in history as one of the most bungled face plants. But coverage from AT&T-owned CNN mentions absolutely no part of AT&T’s hubris or repeated failures. Not a single error or layoff is cited as the AT&T-owned company attempts to explain to readers why AT&T is tucking its tail between its legs and running for the exits:

“On Monday morning AT&T (T) and Discovery, Inc. (DISCA)announced a deal under which AT&T’s WarnerMedia will be spun off and combined with Discovery in a new standalone media company. The deal, subject to regulatory approval, will combine two treasure troves of content, including the HBO Max and discovery+ streaming services. CNN will be included in the transaction.”

Writing a 1,000 word story on AT&T’s media ambitions without citing a single strategic error takes some real skill.

Other outlets, like Variety, did a much better job capturing the absolute chaos going on inside AT&T’s acquired properties as employees are jerked from one bad decision to another, and now prepare for yet another wave of massive restructuring (and likely more layoffs):

“There?s no way this deal doesn?t make AT&T look like fools,? said a WarnerMedia veteran.

?People are in shock,? said a longtime WarnerMedia insider. Department heads lamented the promise that the coming days would involve the laborious process of trying to reassure executives at a time when the future is anything but clear.

“Here we go again,? one executive said.

AT&T executives genuinely thought they could buy, merge, bully, and bribe their way to media and online advertising dominance. But as government-pampered natural monopolies, US telecom giants genuinely find competition and innovation to be alien constructs. So every time they attempt to wander outside of their core competencies (building and running networks, lobbying to limit broadband competition), the end result is… embarrassing. Just ask Verizon’s Go90/AOL/Yahoo venture. Or Verizon’s VCAST-branded app stores and video services. Or AT&T/Verizon/T-Mobile’s doomed “ISIS” branded mobile payment platform.

Irony being that the money spent on these megadeals, and the endless lobbying required to ensure they survive, is being thrown around at the same time many of these companies are skimping on broadband infrastructure investments. The money spent on AT&T’s media ambitions alone could have funded fiber to every home in America. Instead we got tens of thousands of layoffs, no shortage of empty promises about amazing “synergies”, and the death of Mad Magazine.

Granted there’s plenty of blame to go around for the massive financial, market, and human costs of these repeated, expensive face plants. Including a media that adores parroting pre-merger hype, and rarely follows up after the fact to confirm whether those promises are true (sorry, that’s just not profitable). As well as US regulators and antitrust enforcers that, merger after merger, simply refuse to do their jobs. Collectively this results in a broader culture where we make the same mistakes time and time again, markets and employees suffer, yet we refuse to learn much of anything whatsoever from the experience.

Filed Under: , , , , ,
Companies: at&t, directv, discovery, time warner

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Comments on “After 50,000 Layoffs And Absolute Chaos, AT&T Ends Its Bungled Media Experiment”

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Samuel Abram (profile) says:

The only good thing.

The only good thing that came out of AT&T’s ownership of WarnerMedia is that new Warner Bros. Movies were available to stream on HBO Max at the same time they were out on theaters. To be fair to Karl Bode, COVID-19 putting everyone under de facto house arrest had more to do with that, but I’m still extremely grateful for it.

What planet do you live in? says:

Re: The only good thing.

you are missing the point, this reporting is about the human capital destruction, how many careers destroyed, companies destroyed, all for nothing.. where are the analysts that supported this fiasco? They need to apologize to the world. Just sick of companies like AT&T AND THEIR BOARD OF DIRECTORS

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Anonymous Coward says:

I’m not entirely sure "building and running networks" is really one of AT&T’s "core competencies" any more.

It’s more of a sideline to their main business of screwing over captive customers…

fairuse (profile) says:

Re: HBO gets to get back to making good content (I hope)

I would say HBO/Cinemax creation had producers and directors nearly camping at the door before AT&T.

Cinemax [now closed production studio] projects gave creators a place to "make cinema" without suits up their butt. The series "Banshee" was a weekly jaw-dropping event. Marketing : Web site with backstory videos for each season (other studios now copy). DVD sets with commentary. And more.

That established production house was shot in the back of the head and buried, as far as I know. HBO being the tent for the more racy Cinemax (people less dressed was my tag).

Who knows. Discovery — Science, History, house/Garden, cooking, well scripted Reality TV series that fans love.

I figure micro-bundles content with HBO pulling in new subscriptions. The Cable Company bundle of stupid channels with HBO/Cinemax/Showtime unique content helping draw people is dead. Ron Harris girls on Showtime – google it.

HBO label will be like Amazon Studios – producer

Thad (profile) says:

AT&T also made numerous enemies along the way by reshuffling and shitcanning numerous top executives, gutting numerous brands that were popular with consumers (Mad Magazine, DC’s Vertigo imprint)

I’ll definitely give you Mad, and AT&T has done some real damage at DC, but Vertigo was in a death spiral years before the merger. Paul Levitz was fired in 2009, Karen Berger left in 2012, and Shelly Bond left in 2016. During those years, Vertigo’s contracts got a lot less creator-friendly; WB corporate increasingly wanted Vertigo to fall in line with the rest of the DC line as a work-for-hire IP farm rather than an imprint that published creator-owned titles. Increasingly, the kind of creator-owned books you used to see at Vertigo were winding up at Image.

It’s true that Vertigo didn’t go away entirely as an imprint until after the AT&T buyout. But by that point, all that was left of it was the logo anyway.

Anonymous Coward says:

The scam is, that AT&T exec board are going to buy out Time Warner’s entire IP for a fraction of its actual worth.

They will undersell everything, and buy it via shell companies. Thats what they did when they spun out DirecTV.

Now the AT&T board and biggest shareholders own a crapton of IP, illegally sold under value. Probably that the SEC needs to be involved for market manipulation.

Randall S says:

Idiot Dreamer at the wheel

Wow more synergies. Merging with Discovery will make us rich..said FF Stanky..
Open the champaign!!!! Did anyone told him that… that discovery is pure garbage programming?
Is he is forgetting that he owns 71% of everything… including loses in business…
Who cares .. they only care about synergies AKA LAYOFFS AND …MORE LAYOFFS

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