Fox News parent Fox Corp. and Wall Street Journal parent News Corp share common ownership.
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TNT and TBS carry general entertainment programming, but much of their value is in their rights to air major sporting events, including NBA basketball and college basketball’s “March Madness” tournament. Some employees in these cable channels—once known as the Turner networks—have complained AT&T has starved them of resources and attention, as it favors HBO Max. AT&T executives have disputed that charge. WarnerMedia Chief Executive Jason Kilar said at a recent investor conference that a recent seven-year deal to air National Hockey League games was “a sign to the market that we are investing in the Turner networks” for the long haul.
AT&T still earns most of its profits from mobile-phone and broadband service. Its reported net debt surged to $169 billion at the end of March following an expensive Federal Communications Commission auction for wireless spectrum licenses. The Dallas-based company will need to spend billions of dollars over the coming years to build and maintain an ultrafast fifth-generation wireless network that can keep up with rivals T-Mobile US Inc. and Verizon Communications Inc.
AT&T had talks in recent years with Discovery and HGTV owner Scripps Networks before Discovery acquired it in 2018, according to people familiar with the matter. Some investors have since complained about AT&T’s stewardship of its media assets and the debt it amassed to close the Time Warner deal. Shares closed Friday at $32.24, down about 25% since mid-2016.
The business is now a conglomerate pulled in several directions by its debt load, its obligations as a telecom network operator and the big-budget outlays of its film and TV studios. The company also pays a quarterly dividend that costs about $15 billion a year. Its board last year froze the dividend amount after more than 30 years of annual increases but stopped short of cutting a payout that many investors depend on for steady income.
The channels at the heart of WarnerMedia’s TV business are the latest in a series of assets assembled by former AT&T Chief Executive Randall Stephenson that are now on the block. The wireless giant earlier this year reached a deal with private-equity firm TPG to shed a 30% stake in its DirecTV business for $1.8 billion. Most of the pay-TV unit consists of satellite-TV operations that the company bought in 2015 for $49 billion.
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John Stankey, who became CEO of the conglomerate last year, has said he would treat no asset as sacred and can shed any business that doesn’t contribute to its parent’s overall value. At the same time, he has said the company remains committed to HBO Max as the cornerstone of an entertainment business that keeps wireless and broadband customers engaged while earning a healthy profit itself.
Discovery, known for TV shows such as “90 Day Fiancé” and “Diners, Drive-Ins and Dives,” has recently stepped up its investment in the streaming-video sector. The company placed most of its shows into a single streaming service called Discovery+ and operates niche services such as Eurosport Player and Food Network Kitchen. Together, Discovery’s streaming services have 15 million subscribers globally.
