The DOJ sought to undo AT&T's acquisition of Time Warner and appealed to the D.C. Circuit Court of Appeals.[7] In February 2019, the Circuit Courts upheld the 2018 ruling and the DOJ ceased further attempts at undoing the acquisition.[8] In May 2018, AT&T announced plans to create a streaming platform[9] using WarnerMedia's content library and presided over HBO Max's development. [10][11] After nearly three years of overseeing WarnerMedia, AT&T announced in May 2021 that it would spin-off WarnerMedia to merge with Discovery, Inc.[12] The merger of Discovery and WarnerMedia closed on April 8, 2022, and Warner Bros. Discovery (WBD) was established.[13]
After the breakup, AT&T ventured into new industries in telecommunications. It formed AT&T Broadband to handle its cable and internet operations, AT&T Wireless to manage its wireless broadband, and AT&T Consumer and AT&T Business Services to offer long-distance and enterprise telecom services. Despite the diversification, AT&T Co. spun off its Broadband and Wireless divisions by 2002.[15][16]SBC Communications, the smallest of the "baby bells", went on to acquire several baby bell companies after the passage of the Telecommunications Act of 1996 which deregulated the telecom sector. By 2005, SBC acquired its former parent, AT&T Co., and renamed itself to AT&T Inc. Despite its new name, AT&T Inc. retained its prior history as SBC Communications. [17][18]
Time Warner Center (Headquarters of Time Warner/WarnerMedia from 2004 to 2019)
Time Warner's corporate affairs
Time Warner was the result of the merger between Time Inc. and Warner Communications from 1989 to 1990.[19] Warner Communications, founded by Steven Ross, started out as Kinney National in the service industry, before transitioning to entertainment and cable. Time Inc., founded by Henry Luce in 1922, controlled over a hundred magazines lines.[20] In 1991, Time Warner formed the Time Warner Entertainment limited partnership with companies like Toshiba and US West (a baby bell).[21][22] Time Warner acquired the Turner Broadcasting System in 1996 and gained cable networks like CNN and TBS.[23][24] In 1998, US West became MediaOne and was acquired by AT&T Broadband. This gave AT&T Co. a 25% stake in the Time Warner partnership and marked the first relations between it and Time Warner.[25]
In 2000, America Online agreed to acquire Time Warner in a deal valued at over $150 billion. The merger was the largest of its time and happened at the height of the Dot Com Bubble.[26] On January 11, 2001, the merger closed, and the combined entity, AOL Time Warner, was supposed to be a blend of traditional media and digital media, but it went on to become one of the most infamous mergers in history. The expected synergies between AOL and Time Warner were never formalized, and over $90 billion in losses occurred. Architects of the merger like Gerald Levin and Steve Case along with executives like Ted Turner resigned from the company and by 2003, Time Warner removed AOL from its name.[27] It also gained full ownership of Time Warner Entertainment.[28] Subsidiaries like Warner Music Group, AOL Time Warner Book Group, and Time Warner Cable were either sold or spun off to bring down Time Warner's debt. Under CEOJeff Bewkes, Time Warner completed its formal separation from AOL in 2009.[29][30]
After spinning off AOL and Time Warner Cable, Time Warner was no longer the world's largest entertainment company. In 2014, Time Warner spun off Time Inc. and this left it as a content creation company.[31]21st Century Fox had also spun off its publishing divisions and attempted to acquire Time Warner but later dropped its bid.[32] In 2015, Apple executives proposed Time Warner being purchased by Apple, but both Jeff Bewkes and Tim Cook assert that such an acquisition was never considered.[33] Under CEO Randal L. Stephenson, AT&T formed the Otter Mediajoint venture with the Chernin Group in 2014 and acquired DirecTV for $49 billion in 2015.[34] AT&T grew interested in acquiring a legacy media company and held talks with Summer and Shari Redstone about acquiring CBS Corporation but later backtracked from it.[35]
Bob Iger spoke with Jeff Bewkes about the Walt Disney Company potentially acquiring Time Warner, but these conservations would lead nowhere as Bewkes soon entered talks with AT&T.[36] Following weeks of media speculation, it was announced on October 22, 2016, that AT&T would acquire Time Warner for $85.4 billion and assume debts of $21.3 billion.[37] The merger happened amidst the 2016 United States Presidential Election and Donald Trump, the Republicannominee expressed criticism over it while Hillary Clinton's campaign expressed skepticism.[38]Steve Case, the former CEO of AOL, reflected on the AOL-Time Warner merger and warned AT&T to not repeat the same mistakes that happened with AOL Time Warner.[39]
Republican and Democratic Senators, including Chuck Grassley and Bernie Sanders expressed similar concerns as Trump and Clinton did about the negative impact the merger could have on the entertainment industry.[40] After defeating Hillary Clinton in the Presidential Election on November 9, 2016, Trump, now the President-Elect, stated his administration would not approve the Time Warner deal. Jeff Bewkes and Randal Stephenson testified against Congress on December 7, 2016,[41] and several congressmen expressed concerns about the merger.[42][43] On January 12, 2017, several days before Trump's first inauguration, Randal L. Stephenson and several AT&T executives met with Trump, but the ongoing acquisition was not mentioned.[44] By mid-February, Time Warner's shareholders voted to approve AT&T's takeover, with the acquisition expected to close in late 2017.[45] Commenting on the decision, Jeff Bewkes told investors “We think this transaction makes sense strategically and financially.”
On February 28, 2017, Ajit Pai (FCC Chairman), passed the reviewing decision of the AT&T-Time Warner merger to the Department of Justice.[46] Randal Stephenson and Makan Delrahim (Assistant Attorney General) met on November 8, 2017, to discuss AT&T possibly selling DirecTV or Turner Broadcasting to clear regulations.[47] On November 20, 2017, the DOJ sued AT&T in an antitrust lawsuit to block the Time Warner deal. The case of United States V AT&T (2019) marked the third legal clash between AT&T and the DOJ after AT&T's unsuccessful bid for T-Mobile in 2011 and the 1974 antitrust lawsuit that dismantled the Bell System. It was also the most high-profile antitrust dispute since the DOJ's lawsuit against Microsoft. AT&T argued that the lawsuit was a “radical and inexplicable departure from decades of antitrust precedent” while the DOJ stated the merger would “greatly harm American consumers.”
Prior to the lawsuit, there was sentiment among Wall Street that the DOJ would approve the AT&T-Time Warner deal as it had previously approved Comcast's acquisition of NBCUniversal. As conspiracies arose over the lawsuit secretly being about AT&T's refusal to consider a divestment of CNN, Randal Stephenson commented by saying "Frankly, I don't know.", but he reiterated that AT&T would not sell.[48][49] Settlement talks between AT&T and the DOJ failed by December 19th,[50] and the court trial was scheduled to begin in March 2018. In response, Time Warner and AT&T extended the merger deadline to June 21, 2018.[51] The court trial began on March 19, 2018 and would last for six weeks.[52]US District Judge, Richard J. Leon, presided over the trial. Jeff Bewkes testified on April 18th [53] and assured that AT&T would not withhold Time Warner's content from competitors. Stephenson testified on April 19th [54] and argued that the acquisition presented AT&T with a rare opportunity. On June 12, 2018, Judge Leon ruled that AT&T could proceed with acquiring Time Warner and that it posed no harm to consumers. The acquisition closed on June 14, 2018, and Time Warner was renamed to WarnerMedia.[55][56][57]
Overseeing WarnerMedia
John Stankey, CEO of AT&T and Former CEO of WarnerMedia
Reorganizing WarnerMedia
WarnerMedia (formerly Time Warner) was turned into a limited liability company and fully integrated into AT&T as a wholly owned subsidiary. WarnerMedia's financial reports were reported under AT&T's SEC filings and its ticker symbol of (TWX) ceased trading on the New York Stock Exchange. The AT&T-Time Warner merger led to other ongoing media deals like Disney's acquisition of 21st Century Fox and the Viacom and CBS Corporation media deals being approved. Jeff Bewkes retired from WarnerMedia as its CEO on June 15, 2018, and John Stankey, an AT&T executive, became its new CEO.[58] On July 11, 2018, the Department of Justice sought to appeal Judge Leon's decision on the AT&T-Time Warner deal and appealed to the US Circuit Court of Appeals. AT&T agreed to delay restructuring its WarnerMedia division until February 2019, while the DOJ pledged to cease efforts to overturn the merger if the Circuit Courts upheld Judge Leon's decision.[59][60]
AT&T spent the rest of 2018 acquiring full ownership of its other media properties like Otter Media and creating the advertising company known as Xandr and integrated them into WarnerMedia.[61] It also announced plans to use the content library of WarnerMedia to create a streaming service. On February 20, 2019, the Circuit Courts upheld Judge Leon's 2018 ruling and the DOJ agreed to let AT&T keep WarnerMedia.[62][63] With the DOJ no longer attempting to undo the merger, AT&T began its restructuring efforts on WarnerMedia. Turner Broadcasting System was dissolved in March 2019 and several subdivisions of WarnerMedia were established. This meant Warner Bros., HBO, and the Turner Networks would no longer operate as separate businesses, but under a unified structure. On March 20, 2019, AT&T integrated AT&T SportsNet into WarnerMedia. Longtime executives like Josh Martin, Kevin Tsujihara, and others left WarnerMedia and AT&T appointed new executives to WarnerMedia.
On May 16, 2021, Bloomberg News reported that AT&T was considering an offer to divest equity interest in their media subsidiary WarnerMedia (the former Time Warner, which AT&T acquired in 2018 for just over $85billion in an attempt to become a vertically integratedmedia conglomerate), and have it merge with Discovery, Inc. to form a new publicly traded company.[64][65] AT&T and Discovery officially confirmed the agreement the next day; the merger would be structured as a Reverse Morris Trust, with AT&T shareholders holding a 71% interest in the new company's stock and appointing seven board members, and Discovery shareholders holding a 29% interest and appointing six board members. AT&T would receive US$43billion in cash and debt from the divestment. The merger was expected to be completed in mid-2022.[66][67][68]
The new company would be led by Discovery's current CEO, David Zaslav; WarnerMedia's CEO Jason Kilar's position in the new company was uncertain.[66] Zaslav stated that the two companies would spend a combined US$20billion annually on content (outpacing even Netflix). The company will aim to expand their streaming services, which includes WarnerMedia's HBO Max, to reach 400 million global subscribers.[67] It was stated that the company would aim to achieve $3billion in cost savings via synergies within two years.[69]
On June 1, 2021, it was announced that the merged company would be known as Warner Bros. Discovery, and an interim wordmark was unveiled with the tagline "The stuff that dreams are made of"—a quote from the 1941 Warner Bros. film The Maltese Falcon, itself paraphrasing Shakespeare's The Tempest. Zaslav explained that the company aimed to be the "most innovative, exciting and fun place to tell stories in the world", and would combine Warner Bros.' "fabled hundred-year legacy of creative, authentic storytelling and taking bold risks to bring the most amazing stories to life" with Discovery's "integrity, innovation and inspiration."[70][71]
In an SEC Filing on November 18, 2021, Discovery revealed that talks with AT&T had fallen through, in April 2021, due to disagreements over the ownership of the new company between AT&T and Discovery shareholders, and the amount of debt transferred to Discovery when they merged with WarnerMedia, before talks resumed on May 17, 2021.[72]
In November 2021, during an earnings call, Discovery Streaming CEO JB Perrette discussed possible options for its Discovery+ streaming service post-merger, including bundling the service with HBO Max and eventually merging them under a single platform with a mixture of both companies' technologies. He also noted that WBD may prioritize launching Discovery+ and HBO Max as a unified platform in markets where Discovery+ has yet to launch, such as another parts of the Asia-Pacific.[73] On March 14, 2022, Discovery CFO Gunnar Wiedenfels—who would assume the same position post-merger—confirmed that such a transition was a long-term goal.[74]
On December 22, 2021, the transaction was approved by the European Commission.[75][76] On January 5, 2022, The Wall Street Journal reported that WarnerMedia and Paramount Global (at the time named ViacomCBS) were exploring a possible sale of either a majority stake or all of The CW, and that Nexstar Media Group was considered a leading bidder.[77] The reports also indicated that WarnerMedia and ViacomCBS could include a contractual commitment that would require any new owner to buy new programming from those companies, allowing them to reap some continual revenue through the network.[78] The CW's then-president-and-CEO Mark Pedowitz confirmed talks of a potential sale in a memo to CW staffers, but added that "It's too early to speculate what might happen."[79][80]
On January 26, 2022, AT&T CEO John Stankey stated that the merger was expected to close sometime during the second quarter of 2022.[81][82] On February 1, 2022, it was reported that AT&T had finalized the structure of the merger: WarnerMedia would be spun off pro rata to AT&T's shareholders, and then merge into Discovery Inc. to form the new company.[83][84] The transaction was approved by the Brazilian antitrust regulator Cade on February 7,[85] followed by the United States Department of Justice on February 9.[86] On March 11, 2022, the merger was approved by Discovery's shareholders. Due to the structure of the merger, it did not require separate approval from AT&T shareholders.[87][88]
In an SEC filing on March 25, 2022, AT&T stated that two-way trading of WBD stock with that of AT&T would begin on April 4, 2022, and that a special dividend would be issued the next day to give AT&T shareholders a 0.24 share in WBD for each share of AT&T common stock they hold.[89][90] The merger was officially completed on April 8, 2022, with trading beginning on the Nasdaq on April 11.[91]
Post merger (2022 - Present)
AT&T fully left the media industry in 2025 after selling its majority stake in DirecTV.[92][93]
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