AT&T’s Stankey defends WarnerMedia spinoff at J.P. Morgan event

John Stankey
The news last week that AT&T would unload WarnerMedia to Discovery for $43 billion has led to some brutal headlines for Stankey. (AT&T)

AT&T CEO John Stankey put a globalist gloss on unwinding its content strategy, saying at a J.P. Morgan conference that the Dallas telecom conglomerate had to spin out WarnerMedia to free it to chase worldwide possibilities.

“What’s become clear is that the opportunity for direct relationships with customers in media is truly going to be a global opportunity,” he told J.P. Morgan analyst Philip Cusick in a Monday-morning interview at JP Morgan Chase subsidiary’s Technology, Media and Communications conference. “And our connectivity business, as you know, is kind of capped into the United States.”

The news last week that AT&T would unload WarnerMedia to Discovery for $43 billion — far less than the $108.7 billion it sank into buying Time Warner in 2018, counting debt taken on in that deal — has led to some brutal headlines for Stankey.

New York Times columnist Kara Swisher suggested he might be “the worst media strategist in recent memory,” while Charles Gasparino teed off in the New York Post on Stankey’s “costly empire-building fantasy that evaporated billions of dollars in shareholder value over the past decade.”

In his appearance at J.P. Morgan’s online event today, Stankey emphasized how buying Time Warner, since renamed WarnerMedia, helped to reinforce AT&T’s communications business.

“We had a strong belief that we could help our domestic connectivity business significantly,” he said. “We got a long way down that path and made a lot of good progress.”

He pointed in particular to “lower churn” among AT&T’s broadband subscribers and the ability to put AT&T’s “distribution muscle” behind WarnerMedia assets.

“Realistically, HBO Max wouldn't be where it is today if not for the strength of the two combined companies,” he said. The streaming service that AT&T launched in May of 2020 (and that then spent months without distribution on such platforms as Amazon and Roku) became a bonus item on many premium telecom services from AT&T.

But that strategy doesn’t work where AT&T doesn’t provide connectivity, and meanwhile the rest of the world is open for entertainment growth. Enter Discovery and its own growing international business.

“When you start looking a the opportunity to grow the fantastic subscriber base, we kind of looked at this and say, it’s time to unleash the media assets to go and seize, you know, a multi-hundred-billion-dollar opportunity to become one of the premier media assets for distributing content,” Stankey said.

Saying, “that asset is even better positioned to be successful moving forward on a global basis,” Stankey pointed to the “deeper content library” the combined company can bring and suggested it could capitalize on some post-merger synergies.

Eventually, he predicted it could reach a global scale that would make it attractive to other entertainment firms looking for distribution help.

“You’re going to have platforms that ultimately have enough scale to distribute,” he said, naming Netflix, Disney+ and HBO Max as possibilities. “I think it’s entirely possible that those platforms that have very attractive customer bases and a large number of hours of engagement a day can ultimately aggregate other types of content and distribute them.”