Three years ago, AT&T Inc. marched into Hollywood with big ambitions to be a 21st century media colossus, connecting its booming cellphone business with legendary media properties — HBO, the Warner Bros. film and TV studio and Turner channels including cable news juggernaut CNN.
Now, the company is retreating from those plans.
Daunted by the challenges of competing in the streaming age and shackled by a mountain of debt, the Dallas telecommunications behemoth is poised to spin off its entertainment assets into a new venture with cable programming company Discovery, which owns HGTV, the Food Network and Animal Planet, according to people familiar with the matter who were not authorized to comment.
The companies are expected to announce their proposed joint venture as early as Monday, these people said. Bloomberg News first reported that AT&T and Discovery were in advanced talks to merge their entertainment properties.
The deal would reshape Hollywood, which has already witnessed dramatic contraction after Walt Disney Co.'s $71-billion acquisition of much of Rupert Murdoch’s entertainment empire in 2019. Legacy media companies laid off thousands of workers last year during the COVID-19 pandemic as they’ve witnessed an exodus of once loyal viewers to Netflix, Amazon Prime and Disney+.
The proposed new venture would unite one of the world’s biggest producers of unscripted programming, Discovery, with WarnerMedia, a preeminent producer of movies, including “Godzilla vs. Kong” and “Wonder Woman,” and such TV shows as “Game of Thrones,” “The Voice” and “The Bachelor.”
The proposed transaction, which would require the approval of federal regulators, would mark a stunning retreat for AT&T, which spent $85 billion three years ago to buy Time Warner Inc., the owner of CNN, HBO, TBS, TNT and the storied Warner Bros. film and TV studio. AT&T now appears ready to jettison those assets — although AT&T investors are expected to remain stakeholders.
“What a dismal failure, and what an embarrassing chapter for what was once one of America’s most storied companies,” telecommunications analyst Craig Moffett said.