Commentary New Legacy Media Fitness Workout: Going to The Core

 

Commentary

New Legacy Media Fitness Workout: Going to The Core

• by Wayne Friedman , Staff Writer, December 6, 2024

So AT&T stock is up 38% since the beginning of the year, chiefly because it now is fully focused on what it does best: core mobile and broadband businesses, according to analysts.

The company has now fully divested from its media business deals, something that never meshed well with its longtime communication operations.

This includes jettisoning WarnerMedia to Discovery Inc. in April 2022 for $43 billion -- now called Warner Bros. Discovery.

A year before, it sold 30% of its stake to private equity firm TPG for $16.2 billion. In September of this year, it sold the remaining 70% part to TPG for $7.6 billion.

This is all good news for investors -- going forward.

This news comes as legacy broadband and cable TV distributor Comcast Corp. recently decided to do some in-house cleaning of its own -- a plan to spin off its core cable TV networks.

Comcast's and AT&T's stories are a bit different.

Comcast bought a majority stake in NBCUniversal in January 2011, completing full ownership in February 2013. For years, analysts have touted the merger as a rare success -- a vertical integration of a cable TV distribution/broadband company with a longtime TV/movie content company.

And Comcast is still not out of media content. The NBC Television Network, its TV stations, the Peacock streaming service, movie studio and theme parks remain.

AT&T's business maneuvers are much more obvious. It bought Time Warner for $85 billion in 2018 and sold it four years later. AT&T bought DirecTV 2015 and sold a minority stake (and operational control) in 2021.

Major digital-media companies that are financially strong, which at one time were viewed as potential buyers of these aging media businesses (linear TV networks and satellite delivered distribution) are now just interested in specific business and assets that have some growth potential.

Think about Amazon Prime Video getting the rights to “Thursday Night Football” or YouTube getting “NFL Sunday Ticket.”
More media companies will probably look to separate themselves from down-trending media businesses -- going back to their “core” businesses.

But who will be the strong and fit companies and investors looking to lift all that weight?