After Layoffs And Endless Chaos, The AT&T, Time Warner, Discovery Mergers Come To A Whimpering, Pathetic Finale
from the merge-ALL-the-things! dept
The utterly pointless, decade-long madness that was the Time Warner Discovery series of mergers has come to its pathetic conclusion. Basically announcing that the whole mess was a waste of time, company executives last week quietly announced they’d be untangling much of the partnership and try to pretend the whole thing never happened:
“The theoretical plan, as best as I can understand from the FT report, is to turn Warner Brothers Discovery into one “Goodco” — its (formerly known as HBO) Max streaming business and its Warner Bros. movie studio — and one “shitco” — all of its declining linear TV networks, including CNN, plus most or all of the $40 billion in debt WBD has taken on.
…the biggest takeaway is the seeming admission behind the trial balloon: That the WarnerMedia-Discovery deal — pitched at the time as a way to scale up to fight Netflix and Big Tech companies — hasn’t worked.”
These mergers were supposed to usher forth a wave of amazing synergies and create a new media juggernaut. Instead they resulted in madness and chaos. And the executives in charge of them, like fail upward Time Warner brunchlord David Zaslav, saw accountability in the form of massive compensation packages utterly untethered from any sort of actual competency.
It all began with the AT&T Time Warner and DirecTV mergers, which were a monumental disaster. AT&T spent $200 billion to acquire both thinking it would dominate the video and internet ad space. Instead, the company lost 9 million subscribers in nine years, fired 50,000 employees, closed numerous popular brands (including Mad Magazine), and stumbled around incompetently for several years before giving up.
But that was just the start.
After its tactical retreat, AT&T spun off Time Warner into an entirely new company, Warner Media. Warner Media then immediately turned around and announced a blockbuster merger with Discovery, resulting in the super-creatively named Warner Brothers Discovery.
Things only got worse. Executives there were so cheap they refused to pay residuals to creators, shuttered numerous popular programs they didn’t want to pay for, and engaged in round after round of additional layoffs to achieve promised “synergies” that never arrived. Hundreds of billions of dollars later and the end result is a shittier product and absolute chaos.
The whole mess is a wonderful example of the blistering stupidity of the “growth for growth’s sake” mindset, the perils of mindless consolidation, and our obsession with pointless megadeals that only benefit investors and higher level executives in the form of tax breaks, brief stock bumps, and outsized compensation package.
Everybody else, from artists and employees to consumers, gets screwed in the form of layoffs, higher rates, or lower quality product. It’s not clear how many times we have to repeat the process before we learn anything, in part because there’s no financial incentive for introspection by decision makers.
Filed Under: consolidation, david zaslav, growth, media, mergers
Companies: discovery, warner bros. discovery, warner brothers
Comments on “After Layoffs And Endless Chaos, The AT&T, Time Warner, Discovery Mergers Come To A Whimpering, Pathetic Finale”
And then the company enshittified its streaming services, turning the whole shebang into a giant shitco.
“It’s not clear how many times we have to repeat the process before we learn anything, in part because there’s no financial incentive for introspection by decision makers.”
At least one more time, Ms. Swan, as always.
After so much lies, no wonder that David Zaslav is endorsing Trump.
Bullshiting seems to be the new way of life. Or maybe it has always been.
Re:
“America’s leading industry, America’s most profitable business is still, the manufacture, packaging, distribution and marketing of bullshit.”
-- George Carlin, You Are All Diseased
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All hope is not lost just yet.
… because of course! If they distance themselves from all that debt, they can then try to merge with OTHER companies, while letting the companies they shafted die.
You can bet that no executive, no board member, no major stockholder will be personally responsible for any part of that debt, especially if they were a decision maker in the original mergers.
Re: They’ll even get raises
“You can bet that no executive, no board member, no major stockholder will be personally responsible for any part of that debt, especially if they were a decision maker in the original mergers.”
In fact, the above, especially the executives, will be/have been rewarded handsomely, and will go on to destroy more companies. And the cyle will continue. as more of the hard workers in the bottom and mid-levels lose their jobs.
Re:
This is what the banks did back in the GFC. Of course, they allowed FDIC to close down the “bad bank” portion of things, thereby fobbing the problem off onto someone else.
I’m not so sure that the lenders in this AT&T situation will allow them to get away with this divestiture. The $40B was presumably lent with the understanding that the loans were backed by particular IPs with earning potential. That would be quite a scam to borrow money, and then unilaterally switch out the person responsible for paying.
Because the ‘Submit Story’ link still isn’t working:
UK cops getting to be like US cops. Any wonder ‘ACAB’ and ‘1312’ have taken off in a big way?
How is that “try[ing] to pretend the whole thing never happened”? If it had never happened, each studio would have some obsolete network attached. Granted, I don’t see owning HBO’s or CNN’s networks to be a big deal; they’re not broadcast networks, just video feeds for which people pay, so they’ll eventually go away without much fanfare.
These are both standard behaviors for media companies; the first has long been known as “Hollywood accounting”, and the second will be familiar to anyone who watched linear television in the 1990s, when it was last relevant.
What would introspection look like? We’ve already established that they’re planning to kind-of-end the partnership, which is probably as good as you’re gonna get.
Decade, singular?
Nothing wrong with focusing on the past decade, necessarily, but Time Warner was the poster child for ill-conceived mergers well before that.
Re:
I don’t know if a poster with that many children can be considered to have 1 specific one.
Re: Re:
I’ll bite. What other company would you describe as the poster-child for ill-conceived mergers prior to 2016?
Re:
That was created in 1990—a time when magazines and television networks were still relevant, at least.
The merger with AOL was started (January 2000) just two months before the dot-com bubble began its downturn; the crash was well underway when the deal was finalized. The whole time, AOL was on its way out due to the rise of cable modems and DSL. And the writing was on the wall for linear television. Perhaps only to those who’d experienced file-sharing on fast connections (university dorms in particular), or TiVo; but, then, isn’t it supposed to be an executive’s job to understand where the market is going? They were very much chasing the recent past.
In 2016, when AT&T wanted to acquire Time Warner, it was no longer a secret that linear TV was dying. At the point, the executives were officially in denial; they were chasing the same no-longer-recent past that the AOL-merger proponents had been chasing. (Unless, of course, they had the “shitco” planned all along.)
I remember reading about how the C-Suite was bound by duty or something like that, a claim of fiscal responsibility to the shareholders is made in order to rationalize whatever obtuse shit is going on.
And yet it is seldom seen where the shareholders attempt to hold these stable geniuses feet to the fire they created.
afaik, it is all bullshit excuses for the greed.
Re:
C-suiters have become something of a god-king. Which is how you end up with scenarios like Elon Musk demanding a greater stake in Tesla, and the board knows that they’re fucked if they give into his demands, and also fucked if they don’t.
The problem isn’t just that C-suites have a “fiduciary duty” – the problem is that there aren’t any kind of meaningful consequences if they fail. In order to get any of them to agree working as a C-suite, they demand golden parachutes, an army of assistants, and a list of privileges that would absolutely break an average person’s bank by maintenance fees alone if they even had a hundredth of that list. When a CEO fucks up, they can just float along to the next CEO job, because short of a jail sentence no non-CEO is ever going to be granted that position.
Not shooting for “growth for growth’s sake” would be a good start, but that’s a rational decision that no one in the post-pandemic era is realistically going to go for. In the same way that we have “revenge travel” and “revenge spending”, everyone’s chomping at the bit for more competitiveness and more growth, despite the severely diminishing returns and the desperate need for more holistic approaches to career progression and success for the sake of our mental health.
“It all began with the AT&T Time Warner and DirecTV mergers, which were a monumental disaster. AT&T spent $200 billion to acquire both thinking it would dominate the video and internet ad space. Instead, the company lost 9 million subscribers in nine years, fired 50,000 employees, closed numerous popular brands (including Mad Magazine), and stumbled around incompetently for several years before giving up. But that was just the start.
After its tactical retreat, AT&T spun off Time Warner into an entirely new company, Warner Media. Warner Media then immediately turned around and announced a blockbuster merger with Discovery, resulting in the super-creatively named Warner Brothers Discovery.”
The order of the changes in WBD’s corporate structure is jumbled. AT&T acquired DirecTV in 2014, then bought Time Warner in 2017, and renamed it WarnerMedia. Then in 2021, AT&T spun off DirecTV and U-verse into a separate company (which AT&T holds a controlling 70% share), and subsequently spun out WarnerMedia, which entered into a Reverse Morris Trust merger with Discovery Inc.
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