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.