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SPIN CYCLE

The history of WarnerMedia now that AT&T is spinning it off

An entrance to AT&T stadium with fans milling about.
AT&T is a big tent, but not big enough for a media business
  • David Yanofsky
By David Yanofsky

Editor of code, visuals, and data

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AT&T announced today that it is spinning off WarnerMedia into a separate company as part of its deal to merge the subsidiary with Discovery, resulting in a new company called Warner Bros. Discovery. Current AT&T shareholders will own 71% of the new company and Discovery shareholders will hold the rest. The new company’s ticker symbol is expected to be listed on the Nasdaq under the symbol WBD.

AT&T’s stock price initially fell 3.8% today after the announcement was made prior to the market opening and has remained mostly flat. Discovery’s shares were down 2.7%.

WarnerMedia’s history from Warner Brothers to AOL to Discovery

The long history of Warner traces back to one of the original Hollywood movie studios and flows through mergers, acquisitions, and spinoffs of companies and properties including Time magazine, HBO, CNN, Batman, The Flintstones, and—disastrously—AOL.

Discovery’s businesses include television channels like Food Network, TLC, and its flagship Discovery Channel with its now famous annual Shark Week programming.

Why AT&T is spinning off WarnerMedia after merging with TimeWarner in 2018

AT&T says it’s refocusing its efforts on wireless services—particularly 5G. Last year it spun off DirecTV after just six years of owning the satellite TV service. Merging with TimeWarner was—in part—a bet that cellphone and internet subscribers would be enticed by deals that included access to movies and television. That would provide an advantage to a telecom-owned streaming platform over a content-only company like Netflix.

AT&T wasn’t alone. Amazon supplements its Prime membership with a streaming operation. Apple tries to prop up device sales through its streaming offering. Disney uses its streaming platform to ensure the steady flow of guests into its real (pre-pandemic) money maker, theme parks and consumer products. Nonetheless, AT&T’s spinoff of WarnerMedia is an admission of that dynamic failing to work at the company which traces its history to Alexander Graham Bell and the first telephone.

By shedding its media businesses and focusing on its historic core business of selling access to its communication infrastructure AT&T is trying to make its shareholders more money without having the hassle or strategic tensions of running a content company.

The deal is expected to be completed in the second quarter of 2022.

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