US telco AT&T looks set to exit the entertainment business after the completion of its sale of WarnerMedia to Discovery.
The deal, which was approved by Discovery shareholders last week, will see Discovery merge with WarnerMedia to create Warner Bros. Discovery. The new company will house a content library of nearly 200,000 hours of programming, while also operating streaming services HBO Max and Discovery+.
While AT&T will retain a stake in the company, AT&T CEO John Stankey has indicated that the company’s focus in the future will be on its core telecommunications business.
Speaking at the company’s investor day, Stankey said: “Today, we’re focused on looking forward. We’re coming up soon on a big transition at AT&T: a more focused company, a more focused management team, a commitment to being the best with our resources aligned with that goal.
“After retrenching from entertainment, we have more work to do to differentiate our connectivity. We’re not talking about transformative M&A here. Instead, we’re focused on developing software and capabilities that lay on top of our network and optimise our connectivity value proposition.”
AT&T’s deals in the media and entertainment space have largely backfired and have seen the company rack up huge debts – US$177.4 billion by the end of 2021.
The sale of WarnerMedia to Discovery is the most high-profile retreat from the space, but it has also shifted multiple assets including LATAM pay TV operator Vrio and anime streamer CrunchyRoll. It also turned DirecTV into a standalone company last year.
Ultimately, AT&T aims to reach US$6 billion in cost savings by the end of 2023 as a result of the divestments.