TV Answer Man, will the Warner Media-Discovery deal have any impact on the DIRECTV sale by AT&T? Is that sale still a go or does it wipe it out. And if it’s still a go, will it change the way DIRECTV is run? — Wayne, Fairfax, Virginia.
Wayne, AT&T yesterday sold a 29 percent share of Warner Media (home of HBO, CNN, TNT, TBS and other cable networks) to Discovery. The deal, which is expected to close next year, will create a programming powerhouse to compete with Netflix and Disney+, among others. Discovery CEO David Zaslav will be the CEO of the new company which will include the channels of both Discovery and Warner.
The transaction will not affect AT&T’s sale of a 30 percent stake in DIRECTV to private equity firm, TPG. That deal, which is expected to close in the second half of this year, will create a new DIIRECTV company that will also include U-verse and AT&T TV.
While AT&T will retain 70 percent of DIRECTV, the satellite TV service will be a separate company with no attachment to Warner-Discovery other than the fact that AT&T will own 71 percent of the latter. Both DIRECTV and Warner-Discovery will operate independently from each other.
As I noted here yesterday, the two deals enable AT&T to focus on the company’s core telecommunications business while keeping a sizable investment in the media industry. Considering DIRECTV’S heavy subscriber losses, and HBO Max’s initial struggles, it’s wise for AT&T to allow more experienced media people to run DIRECTV and Warner.
DIRECTV, and particularly Warner, have tremendous potential and will more likely reach it under more suitable management. (Of course, DIRECTV’s greatest potential is a merger with rival satcaster Dish, which could help AT&T further decrease its debt. Like other pay TV services, the satcaster is facing the stiff challenge of cord-cutting.)
Wayne, hope that makes sense. Happy viewing, and stay safe!
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— Phillip Swann