Was This $100 Billion Deal the Worst Merger Ever?

When AT&T’s bold megadeal to buy Time Warner was announced in October 2016, combining AT&T’s broadband and wireless networks with Time Warner content, many analysts and investors cheered. They loved the promise of cutting out the cable middleman and delivering entertainment directly to people’s TVs, laptops, and phones. With Hillary Clinton seemingly poised to be the next president, the regulatory landscape looked favorable. While the AT&T executives acknowledged that they knew next to nothing about Hollywood, they had proven entertainment executives running Time Warner’s divisions. They thought they could bring AT&T’s vast storehouse of consumer data — even artificial intelligence — to the notoriously uncertain task of greenlighting movies and TV shows. Less than four years after the merger, AT&T abandoned its grand initiative. It spun off its Warner Media assets and ceded management control to Discovery. The new company, Warner Bros. Discovery, took on $43 billion of AT&T’s debt, and AT&T shareholders kept 71 percent of the company, a stake worth less than $20 billion. That amounts to a loss of about $47 billion for AT&T shareholders, based on AT&T’s $109 billion valuation of the deal at the time it was announced.