The 80/20 View: WarnerMedia, AT&T, and the end of the media/telco tie up
In his regular column for Mumbrella, Thinkerbell’s general manager Ben Shepherd looks at the twists and tangles of telco companies and their content.
The announcement last week that the telecommunications giant AT&T would be spinning off its WarnerMedia portfolio into a newly listed entity alongside Discovery has seemingly marked the end, at least for the time being, of the appetite of telecommunications companies seeking to diversify into ownership of the content that flows through their pipes.
The deal between AT&T, WarnerMedia and Discovery in a nutshell
The arrangement is relatively straightforward. AT&T will spin off media brands such as CNN, HBO, Warner Brothers, AT&T Sportsnet and Turner into a newco combined with the media assets of Discovery Inc. This will create a business with a reasonable suite of assets across cinema, production, television, streaming, reality/non-scripted and sport. Warner will get a bunch of cash and will receive 71% of the equity in the new business.
Operating forecasts on the arrangement from the companies provided project a US$52 billion annual revenue business with US$14 billion in annual earnings. Merging the WarnerMedia operation with Discovery is forecast to save US$3 billion in reduced operational and administrative expenses.
