AT&T: Must all telco TV end in tears?
May 17, 2021
This blog replaces one about BT trying to sell its expensively fashioned TV assets. AT&T is also bailing from TV, and its entanglement with entertainment makes BT’s foray look cheap and well-managed.
While AT&T keeps a big stake, the maths isn’t appetising from their stockholder’s point of view. The new company has a proforma enterprise value of $76 billion net of debt, of which AT&T has 71 per cent. Three years ago, AT&T paid over $85 billion for Warner Media. And they’ve already sold off their other big TV play, DirecTV, for a distressing price.
David Zaslav, long time Discovery CEO, will lead the new business. There is no mention of AT&T execs to be involved. AT&T gambled heavily on becoming the biggest vertically-integrated content and distribution company, despite the evidence of several prior attempts unravelling (Time Warner itself, Viacom and others). Only Comcast remains in the vertical game.
For Discovery – the wily budget content player that cleverly maintains the spin of a serious TV producer – this gets them out of the little league. For AT&T, it makes the best of a bad (make that awful) job.
Why does it always go wrong for telcos? The logic is impeccable: own the content, own the routes to market, milk the margins. That’s the logic of the spreadsheet. But content doesn’t always respond to the spreadsheet alone, it requires subjectivity, a willingness to make mistakes, judgement and the confidence to back it.
The danger is that when the current generation of content execs move on – the Zaslavs, the Igers, will content be expected to be driven by algorithms in the same way as any other segment? Of course it’s true that hits have always spawned clones aplenty until the well is eventually run dry. But often those hits have come out of ‘nowhere’ in the first place. Nowhere isn’t a formula easily accommodated by an algorithm or a spreadsheet.