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The winners and losers of AT&T's split with WarnerMedia

AT&T is unwinding a huge part of its $84 billion acquisition of Time Warner, less than three years after it closed.

Driving the news: AT&T this morning announced that it will merge its WarnerMedia properties with Discovery Inc.'s media assets.


  • AT&T's contributions will include cable networks CNN, TNN, TNT, Cartoon Network and HBO, plus streaming service HBO Max. Discovery's will include its Discovery-branded content, TLC, Food Network, Eurosport and its Discovery+ streaming service.
  • The deal is expected to close in the middle of next year, via a joint venture that would have projected 2023 revenue of $52 billion and adjusted EBITDA of around $14 billion.

The big winner is Elliott Management, the activist investor which last year took a $3.2 billion stake in AT&T and publicly argued that the Time Warner acquisition didn't make strategic sense.

  • Elliott later signed a ceasefire with new AT&T CEO John Stankey, who agreed to spin off DirecTV via a deal with TPG Capital.
  • There were reports in November that Elliott divested its AT&T stake, but my understanding is that it just sold off its small amount of common stock, but maintain most of its swaps. It subsequently purchased new common stock, to be reflected in a 13F being filed today.
  • It does not appear that AT&T reached out to private equity firms to help buttress the deal.

The big loser is former AT&T CEO Randall Stephenson. Not only were Time Warner and DirecTV his two biggest acquisitions, but his failed pursuit of T-Mobile triggered a massive termination fee that financially strengthened a smaller rival and arguably caused AT&T to sell off wireless spectrum.

The big comp is Verizon, which also has a (relatively) new CEO who views networking as the crown jewel and content as a pricey distraction.

The big note is how rushed this morning's announcement felt, despite some background insistence that it wasn't, per Axios media reporter Sara Fischer.

  • They didn't announce the new company's name, instead saying they'll drop it "later this week."
  • No disclosed decisions yet on if the two streaming services will be merged.
  • Reporters had 30 minutes notice this morning of the Zoom call.
  • No clarity on the future of WarnerMedia boss Jason Kilar, who was notably absent from the press release. Stankey simply said that Discovery CEO David Zaslav — who will run the new business — has lots of discussions ahead of him.

The bottom line: Two things you can always count on after acquiring Time Warner are big controversy and big regrets.

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