After Media Detour, AT&T faces old problems

“It would have been an incredible merger,” said David Barden, senior research analyst at Bank of America. “It would have kind of perpetuated the AT&T heavyweight of growth through acquisition – not through organics – but it failed.

Mr. Stephenson then looked at the attractive profit margins of media and entertainment. In 2014, he announced a deal for DirecTV, a deal he promised to do “redefining the industry. “

But AT&T entered the pay-TV industry at its peak. Shortly after acquiring the satellite service, consumers left in droves.

“One thing they didn’t do – they couldn’t have predicted was that 2014 was the last year of linear video growth,” Mr Barden, referring to the television industry by cable. “Because who was back there backstage?” This little company called Netflix. Customers began to cut their cords and cable subscriptions began to descend.

Then came Time Warner. Many analysts have pointed out that owning a business that makes money by distributing shows and movies as widely as possible would not give AT&T any advantage. In other words, HBO and CNN would still have to be licensed to competitors like Verizon’s TV service or cable giants like Comcast. AT&T would find it difficult to justify keeping the content to itself.

The Justice Department sued AT&T to block the deal, but it lost its case in court.

Makan Delrahim, the former Justice Department antitrust chief who oversaw the trial, said in an interview that AT & T’s frenzied deal-making was a “classic case” of corporate misconduct. The company “went through a series of mergers and acquisitions and was really not rational for their business execution,” he said, “T-Mobile, DirecTV and Time Warner. And that’s the result.

Mr. Whitacre, the founding CEO of modern AT&T, offered another perspective.

“The deals we made while I was president – which was a long time – were to acquire the companies that we knew, the companies that we were in,” he said in an interview. “And when I left, that changed.

Mr Whitacre, who is still an AT&T shareholder, said he liked the deal with Discovery, bringing the company “where we were from, if you will.”

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