Another att merger (2 Viewers)

NashGuy

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Mar 24, 2009
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More like "another AT&T spin-off to partially undo an earlier acquisition". First it was the deal with TPG to spin off AT&T's cable TV services (DirecTV, AT&T TV and Uverse TV), but with AT&T still holding a 70% ownership stake. Now it's today's deal to spin off WarnerMedia and merge it with Discovery, with AT&T holding a 71% stake in that new company.

Buying DirecTV was such a big mistake for AT&T. They bought at the peak of cable TV and lost so much money on that deal. Perhaps they could've made Warner/HBO Max work but they still had so much debt incurred from the earlier DTV deal that they just didn't have the kind of cash needed for fresh HBO Max content to compete with Netflix, while also spending to build out their 5G and fiber networks too.

I think all these businesses will perform better a separate companies focused on one thing: AT&T on network connectivity (wired and wireless), DirecTV on cable TV services (satellite and streaming), and WarnerDisco on content (TV, movies, direct-to-consumer streaming).
 

CyberSpock

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Feb 8, 2017
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Do you ever get the impression that AT&T Management doesn't know what the hell they are doing? Nice work if you can get it.
Having contracted with the old AT&T, I can attest to that hands down. I would have thought the new AT&T wouldn't have acted the exact same way but they did. Astoundingly worse even. They fought and fought for this merger and NOW it's a hot potato? Good Greif.

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Willh699

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May 20, 2009
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something tells me that AT&T is in a lot of debt and spinning off WarnerMedia and DirecTV is a warning sign that they might be either about to prepare for bankruptcy or merge into another merger phone company while getting out of paid TV industry and out of the content maker game.



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Juan

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something tells me that AT&T is in a lot of debt and spinning off WarnerMedia and DirecTV is a warning sign that they might be either about to prepare for bankruptcy or merge into another merger phone company while getting out of paid TV industry and out of the content maker game.



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Nope
 

Justy5

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something tells me that AT&T is in a lot of debt and spinning off WarnerMedia and DirecTV is a warning sign that they might be either about to prepare for bankruptcy or merge into another merger phone company while getting out of paid TV industry and out of the content maker game.



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What a grim assessment! But, I like your thinking.

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Don in CT

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something tells me that AT&T is in a lot of debt and spinning off WarnerMedia and DirecTV is a warning sign that they might be either about to prepare for bankruptcy or merge into another merger phone company while getting out of paid TV industry and out of the content maker game.



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Maybe they will go back to being the old AT&T.
 

slice1900

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Feb 14, 2015
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They're taking another huge writeoff on Warner - larger than with Directv!

If I was an AT&T shareholder I'd be pissed. I'd want everyone in the C suite or in the board when either acquisition was made to be fired immediately, and bonuses for all involved to be clawed back.

Won't happen, but that's what should happen. Those two acquisitions will end up costing the shareholders nearly $100 billion. Like I always say, large acquisitions (anything over $10 billion in my book) almost never work out. The only winners are the M&A guys at the investment bank handling the deal, and the executives of both the buyer and buyee who get bonuses for making it happen. Pathetic.
 

MitchDeerfield

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Now the word on Wall Street is that AT&T is going to reduce its dividend payout. Everyone takes a loss except for the top executives who engineered the takeovers in the first place. AT&T used to be known as a "widows and orphans stock", solid as a rock. No longer.
 

NashGuy

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They're taking another huge writeoff on Warner - larger than with Directv!

If I was an AT&T shareholder I'd be pissed. I'd want everyone in the C suite or in the board when either acquisition was made to be fired immediately, and bonuses for all involved to be clawed back.

Won't happen, but that's what should happen. Those two acquisitions will end up costing the shareholders nearly $100 billion. Like I always say, large acquisitions (anything over $10 billion in my book) almost never work out. The only winners are the M&A guys at the investment bank handling the deal, and the executives of both the buyer and buyee who get bonuses for making it happen. Pathetic.
How's that? They originally paid about $85 billion for TimeWarner. Now they're trading that business for $43 billion plus a 71% ownership stake in a larger content business, WarnerDiscovery (or whatever it'll be called). Discovery had a market cap of over $16 bn. I don't see how they've lost anything here. In fact, I'd say that the value of the Warner unit probably increased a little under their watch with the launch of HBO Max -- folks paying $15/mo for HBO increased by about 33% in the nearly 12 months since its launch (~33 million subs to 44 million).

The huge write-off was with DirecTV. That was a disastrous deal. They massively overpaid for it. Some of the decline in value was likely due to AT&T's poor management but mostly it was just due to the fact that it was a premium-priced satellite cable TV operator. DirecTV was on the cusp of a downfall whether AT&T purchased it or not. AT&T's acquisition probably delayed the likely endgame of a merger with DISH at some point.

Not saying all this to excuse CEOs Stephenson and Stankey. They made huge mistakes and have been handsomely rewarded for them! Again, the biggest blunder was buying and overpaying for DTV. If not for all the debt they acquired from that deal, and then the long legal hold-up on the Warner deal, they might've been able to make the Warner/HBO Max content strategy work. But it takes a lot of cash to build a service that can compete with Netflix and debt-laden AT&T just can't do it while also investing in 5G and fiber. Note that they've now slipped behind T-Mobile as the 3rd place wireless carrier.

I'm generally not a fan of network companies owning content businesses but Comcast is doing OK with NBCU. Although shareholders there would likely be better served if Comcast spun that business off separately. At any rate, setting aside past mistakes, AT&T shareholders, as well as customers of their various services, will probably be better served in the future with three different companies focused on the three different kinds of businesses.
 

MitchDeerfield

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AT&T admits it made a terrible mistake getting into media business with Discovery deal: analyst​

"It is rare that you see a management team and a board actually acknowledge so clearly that they made a terrible mistake and that they're willing to undo it. So I actually give them some credit for it. Now it's not to say it doesn't leave behind a tremendous amount of wreckage, right? I mean they spent $175 billion for these assets and then three years later, they are unwinding those positions for what is kind of in theory, i guess, about $80 billion or so. So they destroyed a ton of value, but not many companies are willing to admit they made a mistake right away," Moffett said.

A very costly mistake. But what is a few billions of dollars between media friends?


 

Don in CT

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AT&T admits it made a terrible mistake getting into media business with Discovery deal: analyst​

"It is rare that you see a management team and a board actually acknowledge so clearly that they made a terrible mistake and that they're willing to undo it. So I actually give them some credit for it. Now it's not to say it doesn't leave behind a tremendous amount of wreckage, right? I mean they spent $175 billion for these assets and then three years later, they are unwinding those positions for what is kind of in theory, i guess, about $80 billion or so. So they destroyed a ton of value, but not many companies are willing to admit they made a mistake right away," Moffett said.

A very costly mistake. But what is a few billions of dollars between media friends?


Ironic that the story is from Yahoo. Another enormous mistake of an investment.
 

RaiderPower

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If I was an AT&T shareholder I'd be pissed...
Although the traders may not be very happy with the obvious, ongoing, and apparent continuous mismanagement at the C-suite level at AT&T, we very long-time shareholders, who have been enjoying 5%+ dividend yields for, well, pretty much forever, aren't the least bit upset.
 

MitchDeerfield

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Although the traders may not be very happy with the obvious, ongoing, and apparent continuous mismanagement at the C-suite level at AT&T, we very long-time shareholders, who have been enjoying 5%+ dividend yields for, well, pretty much forever, aren't the least bit upset.
Do you not understand that the CEO announced that they are cutting the dividend as soon as the deal closes? Plus the stock is down another 5% today.
 
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CyberSpock

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Do you not have understand that the CEO announced that they are cutting the dividend as soon as the deal closes? Plus the stock is down another 5% today.
I'm sure many of the posters are not reading the whole story. This is a disaster for AT&T. The shareholders have to be furious. I am and I'm calling my broker. What was their business plan? Usually when a company does these deals they have a plan to relieve debt and turn profit after a deadline. It's like AT&T just wanted these things because they wanted them. I can't figure it out.

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Juan

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Att changed CEOs...so the other guys pet projects got discontinued...its really that simple...when this guy crashes and burns..att will change directions again
 

SamCdbs

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Here is how the capital markets work.

There are essentially two ways to fund and own large businesses. One is the stock market. The problem with the stock market is that self-appointed empty suit "analysists" decide that this or that is "trending". These are the types of people who tell you that we will have flying cars and food replecators "in a few years". Mostly worthless. A few years ago, they decided that "content will be king" and poured love on T for its acquisitions. Of course, it has not worked out that way. Now this crew has decided that linear TV is dying and that especially satellite TV will soon die out. Of course, linear remains the primary way consumers consume TV, and DirecTV remains huge and profitable. But people listen to these guys and it pushes the stock down. So T is spinning off these assets, but wisely holding on to huge chunks of both, because both will be very important for decades to come.

The other is private capital, where you can sell a good idea without worrying about what some 30 something MBA thinks. I would love to see DirecTV in private equity hands, or as a stand-alone stock. I would buy all I could, as linear TV will be the majority deal for many years to come, and DirecTV the luxury version thereof.

As to this merger, the weak partner in this is, of course, Discovery. T brings good long term contracts with NCAA, MLB, NBA, and now the NHL. Discovery brings 17 English channels, all of which are pretty much variations and remixes of one another, mostly containing time waste material you can find on the educational side of YouTube.
 

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