The stunning announcement that AT&T wants to unload WarnerMedia and merge it with Discovery strikes me as a long overdue admission by the giant telecom that when it acquired what was then Time Warner less than three years ago, it had absolutely no idea what the hell it was doing.
Similar to Verizon Communications ditching Yahoo and AOL, the AT&T move amounts to a belated cancellation of a deal that never should have happened in the first place.
AT&T buying Time Warner was like a rich, smart and successful businessman donning a chef’s hat and, with absolutely no training, entering the kitchen of a world-class restaurant determined to concoct an enticing new dish that would set the culinary world on fire. With no idea what to do, the “chef” resorts to asking a bunch of different people for help — and when the result is a near disaster he keeps messing with it, adding a pinch of salt here and a sprinkle of cumin there, only to make it even worse.
In desperation, he throws up his hands and asks someone else to take over — while the hungry, frustrated diners become even more apprehensive about what the ultimate concoction will be. How, they wonder, do you create a tantalizing dish out of Wonder Woman and the Property Brothers?
That’s going to be up to David Zaslav, the CEO of Discovery who’s been tapped to lead the new, as-yet-unnamed mashup. Working in his favor is his recognition that it all comes down to talent. Speaking with reporters on a Zoom call shortly after the landmark deal was announced, he stressed the importance of building relationships with the talent community and said he would “strive to create the best creative culture” he could.
That’s something AT&T never quite got, as evidenced by the backlash from Hollywood WarnerMedia heaped upon CEO Jason Kilar after his shocking announcement late last year that the studio would simultaneously release its entire 2021 theatrical slate on HBO Max, the media giant’s struggling streaming service.
The sad truth here is that HBO Max has been a disaster from day one, beginning with a mucked-up launch that for a while saw three different streamers operate at the same time, HBO Go, HBO Now and Max. “Go now” seemed to have been the operative phrase for consumers, who largely stuck with Netflix and, as a second choice, signed up for Disney+. Max’s actual subscriber count is something of a mystery; WarnerMedia claims the service as of the first quarter had 44.2 million subs, but that’s combined with regular HBO — and still a far cry from Netflix’s 207 million and Disney+’s 103 million.
Kilar reportedly seeking an exit should surprise no one. His rash move to effectively sucker-punch exhibitors won’t be forgotten, and his near-dismantling of the venerable Warner Bros. Pictures movie studio — which has had a tradition of putting talent first — can, in retrospect, only be seen as misguided. Warner Bros. is — was — a diamond. Kilar is treating it as though it was costume jewelry.
The problem with chucking tradition and legacy and focusing solely on the hot new toy, subscription streaming, is that to compete in a market where there are already two or three strong, established leaders is a quixotic ploy. What do you do when you throw everything you have into a new venture, only to discover it may never be enough?
I find it ironic that AT&T CEO John Stankey remains the telecom’s point person on the WarnerMedia-Discovery deal. As much as he’d like to pin AT&T’s acquisition of Time Warner on his predecessor, Randall Stephenson, Stankey was the true architect behind the deal — just as he was behind an earlier botched venture, AT&T’s $67.1 billion purchase of DirecTV in 2015.
He’s got two strikes against him. I can hardly wait to see if there will be a third.
On the bright side, Zaslav is now in the unique position of being able to undo some of Kilar’s — and Stankey’s — missteps. He can start by following through on his promise to restore relationships with talent and hopefully give Warner Bros. back some of the luster it lost during those three miserable years under AT&T.