Acquisition of Time Warner by AT&T

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Acquisition of Time Warner by AT&T
AT&T logo 2016.svg
Time Warner wordmark.svg
Logo before the acquisition
WarnerMedia.svg
Logo after the acquisition
Initiator AT&T Inc.
Target Time Warner Inc.
Type Vertical Merger
Cost
  • US$85.4 billion, equivalent to $115.5 billion in 2026
  • (equity value alone)
  • US$108.7 billion, equivalent to $146.8 billion in 2026 (assumed debt included)
InitiatedOctober 22, 2016
CompletedJune 14, 2018
Resulting entityTime Warner is renamed to WarnerMedia and turned into a subsidiary of AT&T.
StatusClosed

AT&T and Time Warner announced a landmark acquisition agreement on October 22, 2016, where AT&T would pay $85.4 billion in cash and stock to acquire Time Warner and assume debts of 23.3 billion for a total offer of $108.7 billion. [1] Upon the merger's completion, AT&T would gain ownership of Time Warner. AT&T had already been the largest telecom and Pay-Tv company, and many expressed fears about growing media consolidation. [2] [3] Citing concerns of unfair consumer practices, the Department of Justice sued AT&T on November 20, 2017, to block the merger. [4] The court trial between AT&T and the DOJ lasted for six weeks from March to June 2018 and was often described as “the antitrust trial of the century.” [5]

Contents

On June 12, 2018, the U.S. District Courts ruled in AT&T’s favor and allowed the merger to close two days later on June 14, 2018. [6] Time Warner was then renamed to WarnerMediaLLC and reorganized into AT&T as a private company. [7] With its new WarnerMedia division, AT&T planned to become a vertically integrated media powerhouse, but this changed nearly three years later, on May 17, 2021, when AT&T stated it would divest WarnerMedia and have it merged with Discovery, Inc. through a Reverse Morris Trust transaction. [8] The merger closed on April 8, 2022, with Warner Bros. Discovery being created. [9]

Background and Prelude

AT&T's Whitacre Tower (located in Dallas, Texas) AT&THQDallas.jpg
AT&T's Whitacre Tower (located in Dallas, Texas)

AT&T's monopolistic background

The company to bear the name “AT&T” was founded on March 5, 1885, as the American Telephone and Telegraph Company (renamed AT&T Corporation). It was initially established as a long-distance subsidiary of the Bell Telephone Company, but later merged with it in 1899, and assumed ownership of the Bell System. Theodore Newton Vail was AT&T’s first President and he returned to the company in 1907 to help it develop a centuries-long monopoly over telecommunications. Vail also coined the slogan of “One Policy, One System, One Universal Service” to signify AT&T as the premier telephone company. Through its subsidiaries of Western Electric, Bell Laboratories, and the Bell System, AT&T held dominant positions in manufacturing, research and development, along with control over numerous local phone companies.

In 1913, AT&T and the U.S. Justice Department reached a settlement through the Kingsbury Commitment that granted federal oversight into the Bell System. This helped AT&T avoid federal breakups that led to the dissolution of Standard Oil and the American Tobacco Company. AT&T’s unrivaled dominance in the telephone industry led it to be referred to as “Ma Bell” by critics and supporters alike, but it was later sued by the Justice Department for antitrust violations on November 20, 1974. [10] [11] AT&T battled the lawsuit for nearly eight years until 1982 when it settled with the DOJ, in exchange for divesting the Bell System. [12] [13] The Bell System ended on January 1, 1984, and was broken up into seven "Baby Bell” companies. Despite the breakup, AT&T continued to be a major player in telecommunications. [14] [15] It acquired several telecom companies (including McCaw Cellular Communications, Tele-Communications, and MediaOne) in the 1990s and used them to establish AT&T Wireless Services and AT&T broadband. Through these businesses, AT&T gained dominant positions in cable and broadband. [16] [17] [18]

AT&T briefly became the largest cable operator and broadband provider, but by 2002, it deconsolidated by spinning off its subsidiaries into separate companies. [19] [20] After the spinoff, AT&T was largely viewed as a once-prominent company facing an uncertain future, but this changed upon being acquired by SBC Communications, one of its former Bell System companies, in 2005. SBC Communications emerged in 1984 as the smallest “Baby Bell” company, but through relaxed telecom regulations from the 1996 Telecom Act, it expanded through acquiring several Baby Bell companies. After closing its merger with AT&T Corporation, SBC adopted AT&T’s branding and reincorporating as AT&T Inc., while retaining its previous corporate structure. [21] [22] Through this, AT&T once again became a major telecom player and after acquiring BellSouth in 2006, the Baby Bell companies were mostly consolidated under AT&T, Verizon and Lumen Technologies. [23] [24]

The Time Warner Center, (now the Deutsche Bank Center) which was WarnerMedia's headquarters from 2004 to 2019. Time Warner Center en Columbus Circle - panoramio.jpg
The Time Warner Center, (now the Deutsche Bank Center) which was WarnerMedia's headquarters from 2004 to 2019.

Time Warner's corporate outline

Time Warner was originally founded on January 10, 1990, from the merger of Time Inc. and Warner Communications. [25] [26] Time Inc. was founded by Henry Luce and Briton Hadden on November 28, 1922, and became a prominent magazine company with popular titles like Time, Fortune, and Life. Warner Communications (WCI) was incorporated as Kinney Services on December 26, 1961, as a service conglomerate and later pivoted towards entertainment after purchasing media firms like National Periodical Publications and Warner Bros.-Seven Arts. [27] Steve Ross, who was Chief Executive and Chairman of WCI, later became the sole CEO of Time Warner and the company formed the Time Warner Entertainment limited partnership with partners like Toshiba and US West to bring down debt. [28] [29] [30] After Ross succumbed to cancer, Gerald Levin assumed leadership of Time Warner and later oversaw the purchase of Turner Broadcasting System in 1996. The Atlanta-based entity brought Time Warner an array of cable networks, along with the film studios of New Line Cinema and Castle Rock Entertainment. [31] A consequential event in Time Warner’s history was its merger with America Online on January 11, 2001, which later became infamous for becoming one of the worst mergers in corporate history. [32] [33] [34]

AOL Time Warner, as the merged company was called, was intended to be a combination of traditional and digital media, but the expected synergies between both companies failed to materialize due to the collapse of the Dot Com Bubble and corporate clashes between the companies' executives. AOL Time Warner's share price declined from highs of $71 to record lows of $8.70 per share and in January 2003, AOL made history when it announced an annual loss of nearly $100 billion. [35] [36] Numerous subsidiaries of Time Warner, including Warner Music Group and Time Warner Book Group, were either sold or spun off to bring down the company's debt load. [37] As Time Warner executives reasserted control of the company, AOL saw its influence significantly diminish, with it being most prominently displayed when the company's branding and ticker symbol dropped AOL from the name. [38] [39] [40] Once Jeff Bewkes became CEO of Time Warner, he unveiled plans to further downsize the company with more spin offs announced. AOL was separated from Time Warner as a standalone company on December 9, 2009, bringing an end to one of the most tumultuous mergers in history. [41] [42]

Acquisition developments

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Randall Stephenson, AT&T's Chairman from 2007 to 2021 and Chief Executive from 2007-2020.
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Jeff Bewkes, Time Warner's former Chairman and CEO

Early Negotiations

Time Warner stopped being the world’s largest media conglomerate on March 12, 2009, after separating its Time Warner Cable subsidiary. [43] By May 2014, it left the magazine industry after spinning off Time Inc., leaving Time Warner as a pure play entertainment company after years of downsizing. [44] Between 2014 and 2015, several companies expressed interest in acquiring Time Warner. 21st Century Fox launched an $80 Billion takeover bid to acquire Time Warner at $85 a share but later withdrew following little enthusiasm from Time Warner’s Board of Directors. [45] It was also alleged that Apple Inc. held talks with Jeff Bewkes about potential M&A deal, but both Tim Cook and Bewkes deny this. [46] [47] Around this time, Randall Stephenson began AT&T's diversification strategy into entertainment following stagnant subscriber growth in its wireless division. [48]

AT&T and The Chernin Group formed a digital media joint venture called Otter Media, which owned websites like Crunchyroll and Fullscreen. AT&T also completed its $67 billion purchase of DirecTV on June 15, 2015, and integrated the satellite business into an entertainment group under its communications segment. [49] AT&T briefly became the largest Pay-Tv provider and soon grew interested in acquiring a traditional media business. AT&T held talks with Summer and Shari Redstone about acquiring CBS Corporation but later withdrew. [50] Sometime in August 2016, Randall Stephenson and Peter Chernin spoke at a dinner in Martha’s Vineyard about shifting consumer patterns in mass media. Peter mentioned to Randall about the immense value of Time Warner, and Randall met with Jeff Bewkes at the Time Warner Center.

The two came in agreement about changes in the entertainment industry, and a subsequent acquisition process between their companies began. In order to maintain confidentiality, codenames were used: ‘’Lily’’ for AT&T and “Rabbit’’ for Time Warner. [51] Sometime in Fall 2016, Bob Iger, the Walt Disney CEO, spoke with Jeff Bewkes about a potential merger transaction, but Bewkes declined as agreements with AT&T were already underway. [52] Only a small circle of executives and bankers knew of the ongoing merger transaction, but by September 2016, speculation grew about it. [53] News reports were ‘’AT&T wants to own a media company’’, but by October 20, 2016, media outlets started indicating that AT&T and Time Warner were in an active M&A deal. [54] [55] It was not until October 22, 2016, that AT&T publicly announced its agreement to acquire Time Warner in cash/stock for $85.4 billion and assume debts of 23.3 billion, for $108.7 billion. [56] Time Warner shareholders were set to receive $107.50 per share in cash and AT&T stock. Jeff Bewkes described the transaction as a “natural fit between two companies with great legacies of innovation that have shaped the modern and communications landscape."

Political and Industry Reactions

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President Donald Trump during his first presidency (2017–2021)
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Makan Delrahim, Former Asst. Attorney General for the DOJ's antitrust division
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Former Federal Communications Commission Chairman Ajit Pai

Analyst Michael Nathanson described Time Warner as “the last scaled content play that's acquirable,” noting that other media giants like Disney were either too large to acquire or family-controlled, such as 21st Century Fox and Viacom. AT&T’s purchase of Time Warner would be its biggest acquisition since buying BellSouth in 2006, and it was estimated that the telecom giant could be left with nearly $200 billion in debt. [57] Peter Chernin described Time Warner as having many attractive assets, and Stephenson credited him, quoting that, “Chernin was the one who first got me to appreciate the library that this company owns.'' Financial reactions to the merger varied, with many of Wall Street believing AT&T was overpaying for Time Warner at $107.50 a share compared to its existing share price of $88. The merger drew frequent comparisons to the troubled AOL/Time Warner merger, with Steve Case, the former AOL CEO, reflecting on the turbulent merger and cautioning AT&T not to repeat past mistakes. 21st Century Fox iterated that it was not interested in rebidding for Time Warner. Media outlets like the Wall Street Journal, Variety, and Forbes called the merger historic and predicted it could set off a wave of megamergers and reshape the media landscape.

Political reactions to the acquisition were overwhelmingly negative. AT&T’s purchase announcement occurred in the final weeks of the 2016 U.S. Presidential Election and was met with immediate responses from the political campaigns of Donald Trump and Hillary Clinton. Peter Navarro, the Trump Campaign's economic advisor, referred to the AT&T/Time Warner merger as an oligopolistic realignment of the American media and referred to AT&T as the original Ma Bell monopoly. Tim Kaine, the Clinton Campaign’s Vice-Presidential nominee, expressed concern about the merger. While Clinton never publicly commented on the merger, Trump spoke about it at his rally and stated its “a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.” Senators Mike Lee and Amy Klobuchar, the co-chairs of the Senate Judiciary Subcommittee on Antitrust, released a joint statement on October 24, 2016, saying "An acquisition of Time Warner by AT&T would potentially raise significant antitrust issues, which the subcommittee would carefully examine." Prominent congressmen who were heavily critical of the merger included Bernie Sanders, Chuck Grassley, Al Franken, and Elizabeth Warren. The subcommittee invited the CEOs of AT&T and Time Warner for a Congressional hearing at the U.S. Capitol for a December 2016 date. Due to the naming confusion between Time Warner and Time Warner Cable, Robert D. Marcus was mistakenly listed as an invitee instead of Bewkes. Stephenson responded to growing antitrust concerns and reiterated that the merger would not eliminate competition.

On November 6, 2016, Donald Trump won the Presidential Election against Hillary Clinton, and upon becoming President-Elect, renewed thought emerged over whether the incoming Trump Administration would follow through on blocking the acquisition. Telecom analyst Doug Barke noted that "Trump was quite clear in his distaste for the merger and no doubt the odds of its successful completion are lower this morning than yesterday.” Stephenson and Bewkes appeared at the Subcommittee Hearing on December 7, 2016, to explain their merger rationale and answer questions from congressmen. Present at the hearing were Mark Cuban, who defended the merger and stated it would provide better competition against Big Tech companies like Google and Facebook, while Gene Kimmelman, President of Public Knowledge, cautioned against the merger, saying it would lead to higher costs and fewer choices for consumers. Several days before Trump’s first inauguration, Stephenson and several AT&T executives met with Trump to discuss relevant American issues like job creation and tax reform, but the ongoing merger was not discussed. Stephenson went into greater detail about the discussion with the Wall Street Journal’s Matt Murray on January 17, 2017. Upon being inaugurated as President, Trump appointed Ajit Pai as Federal Communications Commission Chairman,

Regulatory Approval and Court Trial

CountryCommission or Governing AgencyStatus
Flag of Europe.svg European Union The European Commision (EC)Approved on March 16, 2017
Flag of Mexico.svg Mexico Federal Telecommunications Institute (IFT) and Federal Economic Competition Commission (COFECE)Approved on August 22, 2017
Flag of Brazil.svg Brazil Administrative Council for Economic Defense/Conselho Administrativo de Defesa Econômica (CADE)Approved on October 24, 2017
Flag of Chile.svg Chile National competition authority in Chile/Fiscalía Nacional Económica (FNE)Approved on September 5, 2017
Flag of the United States.svg United States Federal Communications Commission and Department of Justice Approval delayed due to legal action. Courts granted approval

on June 14, 2018, and later guaranteed on February 20, 2019

Time Warner shareholders voted to approve AT&T's takeover On February 15, 2017. Ajit Pai passed the reviewing decision of the ongoing AT&T/Time Warner merger from the Federal Communications Commission to the Department of Justice on February 28, 2017. The European Commission approved AT&T's acquisition on March 16, 2017. John Stankey, then the head of AT&T's Entertainment Group, was named the next CEO of Time Warner on July 14, 2017. While being interviewed by The Hollywood Reporter, Stankey promised that AT&T would respect Time Warner's Hollywood-driven culture. Mexican Regulators approved AT&T'S takeover on August 22, 2017, while Brazilian regulators, despite expressing some concerns over AT&T's growing media properties, approved the takeover on October 24, 2017. Randall Stephenson and Makan Delrahim, the Assistant Attorney General for the DOJ's antitrust division, met on November 8, 2017, to discuss AT&T potentially selling DirecTV or Turner Broascasting to clear regulatory hurdles. However, the Justice Department would later sue AT&T on November 20, 2017, to block the merger. The lawsuit, United States V. AT&T, marked the second legal battle between AT&T and the DOJ, following AT&T's unsuccessful bid for T-Mobile in 2011, and the most significant dispute between the parties since the Bell System breakup. It was also the biggest antitrust dispute since the Justice Department's attempt to breakup Microsoft in 2001 and marked the first time in decades that the DOJ attempted to break apart a vertical merger.

Conflicts with Justice Department

In his first response to the merger since taking office, President Trump stated "I've always felt that was a deal that's not good for the country.'' Many on Wall Street were surprised by the lawsuit, as the Justice Department previously approved the Comcast/NBCUniversal merger and conspiracies started arising over the lawsuit secretly being politically motivated due to CNN's coverage of the Trump Administration. Jeff Bewkes rejected these sentiments and believed there was no political involvement. AT&T described the lawsuit as being a "radical and inexplicable departure from decades of antitrust precedent.'' The Justice Department stated the merger would greatly harm American consumer and the Consumer Federation of America supported blocking the merger, describing it as one of the most damaging vertical mergers in recent history. Settlement talks between AT&T and the DOJ failed by December 19, 2017, and the court trial was scheduled to begin in March 2018. If the DOJ won, AT&T would either withdraw its bid to acquire Time Warner or divest ownership of either Turner Broadcasting, DirecTV, or CNN. In response, AT&T and Time Warner extended their merger deadline to June 21, 2018. The court trial began on March 19, 2018, and was overseen by District Judge Richard J. Leon, (the same judge who approved Comcast's purchase of NBCUniversal).

Media outlets often referred to the court trial as the antitrust trial of the century. The DOJ said the trial would "chart the course for the future of video-content delivery in the United States." The court trial was the most significant federal review into Hollywood since the Paramount Decree of 1948. Representing the Justice Department was Craig Conrath while Daniel Petrocelli jointly represented AT&T and Time Warner. Petrocelli argued that letting AT&T purchase Time Warner would grant stronger competition against Big Tech companies. Jeff Bewkes testified on April 18, 2019, and assured that AT&T would not withhold Time Warner content from competitors. Stephenson testified on April 19, 2018, and said acquiring Time Warner presented AT&T with a rare opportunity. On June 12, 2018, Judge Leon ruled AT&T could proceed with purchasing Time Warner and stated the merger did not harm consumers. Outside the courtroom. Makan Delrahim said the DOJ would review Judge Leon's decision and the Justice Department said, "we will closely review the Court's opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers."

Post merger integration

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John Stankey, the current Chairman and CEO of AT&T. WarnerMedia CEO from 2018 to 2020.
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Jeff Zucker, former President of WarnerMedia News & Sports and CNN Worldwide
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Gerhard Zeiler, the current WBD International President.

Immediate Changes

AT&T officially completed its purchase of Time Warner on June 14, 2018, and took the company private and reported its financial statements under its SEC filings. Immediate changes to Time Warner included converting it into a Limited Liability Company, delisting its ticker symbol (TWX) from the stock market, and dissolving its Board of Directors. On June 15, 2018, AT&T renamed the company to WarnerMedia to avoid confusion with the separate Time Warner Cable. Jeff Bewkes retired as CEO and was succeeded by longtime AT&T executive John Stankey. [58] WarnerMedia employees received special discounts on AT&T services, though some were hoping for free smartphones. In a June 18, 2018, interview with Variety, Stankey acknowledged AT&T’s high debt load of $180 billion but assured it manageable. He said he planned to familiarize himself with WarnerMedia's 24,000 employees, remarking, “None of these employees know me or who I am. I need to pull some mystery out of the equation.” He also ruled out major reorganization, stating that the current plans were to integrate WarnerMedia’s content creation with AT&T’s data-mining operations.

On July 12, 2018, the Justice Department appealed Judge Leon’s merger ruling to the D.C. Circuit Court of Appeals. AT&T stated it would not sell any of WarnerMedia assets but would delay further changes to the company until the court’s decision. For the rest of 2018, WarnerMedia experienced minimal changes aside from replacing several executives. On August 7, 2018, AT&T acquired the remainder of Otter Media from the Chernin Group and brought it under its WarnerMedia segment. The unit consisted presently of Warner Bros. Entertainment, Home Box Office, Inc., Turner Broadcasting, and Otter Media. To further complement its vertically integrated media strategy, AT&T acquired AppNexus on September 25, 2018, and brought it under its newly reorganized ad tech division of Xandr (named after Alexander Graham Bell). AT&T also announced plans for WarnerMedia to develop a streaming service using HBO's branding to compete against other streaming businesses like Netflix and Hulu. The Circuit Courts upheld Judge Leon's ruling on February 20, 2019, and the DOJ agreed to end its efforts at undoing the merger. With all legal hurdles cleared, it was widely expected that AT&T would soon carry out a massive overhaul of WarnerMedia's operations. Upon this news, HBO's Richard Plepler and Turner's David Levy resigned from the company and cited conflicting views with AT&T's media strategy. Turner Broadcasting System was dissolved as an active business on March 4, 2019, and WarnerMedia's assets were brought under several streamlined units.

WarnerMedia’s new divisions included WarnerMedia Entertainment & Direct to Consumer, headed by former NBC executive Robert Greenblatt, managing Home Box Office, TBS, TNT, TruTV, and the soon-to-launch streaming service. WarnerMedia News & Sports, led by CNN President Jeff Zucker, oversaw AT&T SportsNet, Turner Sports, CNN Worldwide, and Bleacher Report, along with WarnerMedia Affiliates and Advertising Sales, led by Turner International President Gerhard Zeiler, who handled the company’s consolidated advertising and distribution sales. Meanwhile, Warner Bros. Entertainment CEO Kevin Tsujihara was put in charge of a subdivision named Warner Bros. Global Kids, Young Adults & Classics, which ran Otter Media, Cartoon Network Inc., and TCM. [59] [60] AT&T stated the restructuring was a part of larger efforts to eliminate corporate barriers between WarnerMedia's subsidiaries and centralize the company's assets. On March 13, 2019, Ted Turner issued a statement entrusting Stephenson and Stankey to handle Turner Broadcasting's former assets. [61] In a series of debt reduction moves, AT&T sold WarnerMedia's 9.5 stake in Hulu to the Walt Disney Company for 1.43 billion on April 15, 2019, and completed a $2.2 billion sale-leaseback of WarnerMedia's 30 Hudson Yards headquarters on April 24, 2019. Otter Media was also transferred to WarnerMedia Entertainment and given oversight to preside over WarnerMedia's upcoming streaming service. [62] . [63] The platform was later unveiled as HBO Max on July 9, 2019, and slated for a spring 2020 release. [64]

Debt Management and Further restructuring

Preview logo of HBO Max HBO Max with background.svg
Preview logo of HBO Max

In an interview with CNBC on June 7, 2019, Stankey was asked about his role nearly a year after becoming WarnerMedia’s CEO. He denied rumors of culture clashes between WarnerMedia and AT&T and mentioned plans to integrate DirecTV Now into the upcoming streaming service, although this never happened. Stankey was promoted to AT&T’s President and Chief Operating Officer on September 3, 2019, fueling speculation about whether he was next in line to succeed Randall Stephenson as AT&T’s CEO. On September 9, 2019, Elliot Management, an activist investment firm, acquired a $3.2 billion stake in AT&T and sent a letter to its Board of Directors criticizing the company’s diversification strategy into entertainment. Elliot remarked that AT&T’s large purchases of Time Warner and DirecTV left it heavily indebted and were directly responsible for a stagnant share price, stating, “AT&T has yet to articulate a clear strategic rationale for why it needs to own Time Warner,” and suggested selling DirecTV. Elliot also questioned Stankey’s leadership of WarnerMedia. On September 17, 2019, Stephenson denied that Stankey was succeeding him, defended his M&A strategy, and said it would benefit AT&T in the long run.

Stankey also defended these acquisitions, stating, “The collection of assets we have accumulated was pointed out to be something that could create significant value.” President Trump, who previously called for a boycott of AT&T over its ownership of CNN, praised Elliot’s stake and suggested it could improve the cable network. Stankey reaffirmed his previous statements, calling critics of Stephenson’s diversification strategy “categorically wrong,” and said no successors were being considered for him as WarnerMedia CEO, adding, “I’m not looking to find my successor right now.” When asked by the Wall Street Journal about AT&T’s succession plan, Stankey declined to comment, saying it was up to the Board of Directors. On September 28, 2019, AT&T and Elliot Management reached a three-year resolution, with Stephenson pledging to remain AT&T’s Chairman and CEO until 2020 and stating that the company would “evaluate multiple options and partnerships for DirecTV.” HBO Max was introduced to AT&T investors at the Warner Bros. Studios Burbank Lot on October 29, 2019, with a scheduled release in May 2020, priced at $14.00 per month and offering over 10,000 hours of content. Stephenson described HBO Max as being in a league of its own and unlike other streaming platforms.

AT&T committed to investing $2 billion annually into HBO Max and projected it would reach 75-90 million subscribers by 2025, achieving profitability by then. By December 2019, it was reported that potential successors to Stankey as WarnerMedia CEO were being considered, with Robert Greenblatt and Brian Lesser emerging as contenders. The January 2020 AT&T annual report stated that the company paid down over $20 billion in debt during 2019. WarnerMedia also announced a new film label for HBO Max called WarnerMax. By March 11, 2020, Xandr CEO Brian Lesser left AT&T after learning he would not become WarnerMedia’s next CEO. Like many media conglomerates, WarnerMedia was heavily affected by the COVID-19 pandemic due to stay-at-home orders and restrictions on public spaces, which led to profit losses and mass layoffs. On April 24, 2020, John Stankey was named AT&T’s next CEO, and Hulu cofounder Jason Kilar was appointed as WarnerMedia’s new CEO. Xandr was integrated into WarnerMedia on April 30, 2020, and HBO Max launched on May 4, 2020. Many Warner Bros. films were either delayed or released directly to HBO Max. In August 2020, Jason Kilar carried out another reorganization of WarnerMedia, that resulted in Robert Greenblatt’s departure and the consolidation of WarnerMedia Entertainment’s assets and Warner Bros. Entertainment into WarnerMedia Studios & Networks. HBO Max was placed under management of WarnerMedia Direct, while WarnerMedia International was separated from WarnerMedia Sales & Distribution. By Fall 2020, most Time Warner era executives had departed from WarnerMedia. Jason Kilar and by extension WarnerMedia, faced great criticism from the entertainment industry for their Project Popcorn initiative that released the entirety of Warner Bros' 2021 film slate across theaters and HBO Max. 

WarnerMedia Studios & NetworksWarnerMedia News & Sports WarnerMedia International WarnerMedia Sales & DistributionWarnerMedia Direct
CNN Worldwide

Turner Sports

Bleacher Report

AT&T SportsNet

WarnerMedia EMEA

WarnerMedia Latin America

WarnerMedia Asia-Pacific

Otter Media

Xandr

Advertising, Content Licensing

and advertising for WarnerMedia

 HBO Max

                       

Divestment and Spinoff

Logo of Warner Bros. Discovery Warner Bros. Discovery.svg
Logo of Warner Bros. Discovery

Reverse Morris Trust process

On May 16, 2021, Bloomberg News and other media outlets reported that AT&T was considering divesting its ownership of WarnerMedia and have it merge with Discovery, Inc. These reports were later proven true when AT&T and Discovery jointly announced their definitive merger agreement on May 17, 2021, that would see WarnerMedia separated from AT&T through a Reverse Morris Trust and transferred to Discovery to form a new publicly traded company. AT&T shareholders would own 71% of the new company's stock while Discovery shareholders would own the remainder. The new Board of Directors would consist of seven AT&T appointees and six Discovery appointees. The company's executives would mostly consist of Discovery's executives and be led by David Zaslav. The outgoing WarnerMedia CEO, Jason Kilar, along with most WarnerMedia executives, were expected to resign upon the merger's completion. Goals for the new company included an annual spending of $20 billion on content, merging the streaming services of HBO Max and Discovery+, achieving $3 billion in cost savings via synergies, and reaching 400 million global subscribers.

On July 1, 2021, the name for the new company was announced as Warner Bros. Discovery, with the initial tagline included "The stuff that dreams are made of"—a quote from the 1941 Warner Bros. film The Maltese Falcon. David Zaslav outlined a plan for Warner Bros. Discovery to be the "most innovative, exciting and fun place to tell stories in the world" and 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." [65] [66] AT&T would receive US$43 billion in cash and debt from the divestment while WBD would inherit over $40 billion in debt. The merger was expected to be completed in mid-2022. [67] [68] [69] 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. [70] 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. [71]

On January 26, 2022, AT&T CEO John Stankey stated that the merger was expected to close sometime during the second quarter of 2022. [72] [73] 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. [74] [75] The transaction was approved by the Brazilian antitrust regulator Cade on February 7, [76] followed by the United States Department of Justice on February 9. [77] 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. [78] [79] 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. [80] [81] The merger was officially completed on April 8, 2022, with trading beginning on the Nasdaq on April 11. [82]

Recent Developments

Despite AT&T no longer being involved with the entertainment industry by 2022, it continued to own a 70% majority stake in DirecTV, with the remaining 30% being owned by TPG, Inc. It was not until Late 2024, when AT&T reached an agreement with TPG to transfer full ownership of DirecTV, with the transaction later being completed by July 2025, marking the first time since 2015, that AT&T was no longer involved in and way or shape with satellite television since 2015. [83] [84]

Works cited

Coll, Steve (January 1, 1988). The Deal of the Century: The Breakup of AT&T. Simon & Schuster. ISBN   9780671645922.

References

  1. ↑ Gryta, Thomas; Hagey, Keach; Cimilluca, Dana; Sharma, Amol (October 22, 2016). "AT&T Reaches Deal to Buy Time Warner for $85.4 Billion". The Wall Street Journal . ISSN   0099-9660. Archived from the original on October 22, 2016. Retrieved September 10, 2016.
  2. ↑ Johnson, Ted (July 24, 2015). "FCC Approves AT&T-DirecTV Merger". Variety. Retrieved January 22, 2026.
  3. ↑ Gara, Antoine (May 24, 2017). "The World's Largest Telecom Companies: AT&T And Verizon Top China Mobile". Forbes . Retrieved September 14, 2025.
  4. ↑ "Office of Public Affairs | Justice Department Challenges AT&T/DirecTV's Acquisition of Time Warner | United States Department of Justice". www.justice.gov. November 20, 2017. Retrieved September 15, 2025.
  5. ↑ "U.S. v AT&T/Time Warner: The Antitrust Trial of the Century – Harvard Journal of Sports and Entertainment Law". journals.law.harvard.edu. March 25, 2018. Retrieved January 22, 2026.
  6. ↑ Ivanova, Irina (June 12, 2018). "Judge approves AT&T-Time Warner merger without conditions". www.cbsnews.com. Retrieved September 15, 2025.
  7. ↑ Morgan, Richard (June 16, 2018). "Time Warner will be renamed Warner Media, Turner CEO exits". New York Post . Retrieved September 14, 2025.
  8. ↑ James, Meg; Battaglio, Stephen (May 17, 2021). "AT&T to spin off HBO, other WarnerMedia assets in a huge deal with Discovery. What went wrong?". Los Angeles Times. Archived from the original on May 17, 2021. Retrieved September 14, 2021.
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