Although AT&T CEO Randall Stephenson conceded that he’s never run a movie studio before, chances are the acquisition of Warner Bros. Pictures, part of the company’s $85.4 billion bid to buy Time Warner Inc., isn’t an afterthought.
Certainly, in 2009, when Comcast first proposed buying NBCUniversal, there wasn’t a whole lot of attention paid to the cable company taking over a badly slumping Universal Pictures unit that had fallen to dead last among the major movie studios.
Indeed, seven years ago, Time Warner’s Warner Bros. Pictures unit controlled 19.7 percent of the North American box office, running away with the marketshare crown with hits like Harry Potter and the Half-Blood Prince, The Hangover and The Blind Side.
With its powerful Minions still a year away from hitting the global box office and turning the fortunes of the studio around, Universal controlled just 8.3 percent of the North American theatrical market in 2009.
Jump forward to 2015, and Universal controlled the lion’s share of the global box office, bringing in more than $2.4 billion in North American theatrical revenue alone and generating intellectual property that sparked EBITDA for Comcast across not just cable video on demand, but in robust businesses like theme parks and consumer products.
The success of the Universal Pictures purchase was a big reason why Comcast ponied up another $3.8 billion earlier this year for another movie studio, DreamWorks Animation.
All going to regulatory Hoyle, AT&T will take over a Warner Bros. currently residing in second place in North American box office share, with hits like Batman v. Superman: Dawn of Justice, Suicide Squad and Central Intelligence driving domestic revenue alone to nearly $1.6 billion through just three quarters.
Still to come this year is the Will Smith vehicle Collateral Beauty. Further, The LEGO Batman Movie, Wonder Woman and Justice League have helped highlight a 2017 Warner slate that’s powered by DC Comics licensing rights.
And none of this is even mentioning the potential value of Warner’s TV studio operation, which produces hits including CBS’ The Big Bang Theory.
“This deal is not about cost savings, it is about growth opportunities and our expertise in creating world-class content,” Warner studio boss Kevin Tsujihara said in a note to employees today. “AT&T recognizes that the value of our brands and businesses depends upon the expertise of our team, and they are very committed to retaining the talented people who have made our company the best in the industry.”
Notably, Stephenson said that the Warner Bros. studio operations will continue with their current management structure, which includes Time Warner being run as a wholly owned subsidiary of AT&T.