AT&T Just Undid a Big Deal. Here’s What Comes Next.

AT&T is painting a rosy picture for the future of its media business, which it will spin off and merge with Discovery. That new streaming giant is a formidable stand-alone competitor to Netflix and Disney. The move leaves AT&T to focus on its telecom business, which looks less bright after being overshadowed by its expensive — and ultimately futile — deal-making binge in media and entertainment under its previous chief, Randall Stephenson.

Here’s how AT&T got here, in three key deals:

  • A $39 billion bid to buy T-Mobile. After regulatory pushback, in 2011 AT&T walked away from an effort to become the country’s largest wireless company. T-Mobile paired up instead with Sprint, and the two went on to buy huge amounts of spectrum in the high-stakes battle for 5G, leaving AT&T behind as it lobbies regulators to step in. The failed deal hit AT&T with a $3 billion dollar breakup fee, at the time the largest ever.

  • The $67 billion acquisition of DirectTV. In 2015, AT&T bet on cable TV as a way to amass customers whom it could eventually convert to streaming. But DirectTV bled subscribers as customers cut the cord, and AT&T unloaded a stake in the company last year to TPG that valued DirectTV at about a third of its acquisition price. The deal also cost AT&T about $50 million in advisory fees, according to Refinitiv.

  • The $85 billion acquisition of Time Warner. In 2018, Stephenson called the deal a “perfect match,” but the combined group struggled to invest in its telecom business while also spending enough to compete with the entertainment specialists at Netflix and Disney. Three years later, AT&T is now spinning off the company so it can (re)focus on its quest for 5G market share. AT&T paid $94 million in advisory fees to put the two companies together and an estimated $61 million to split them apart. (Side note: Kurt Simon, who advised AT&T on the purchase of Time Warner while he was at JPMorgan, also advised AT&T on the deal with Discovery as a banker at Goldman Sachs.)

Up next: debt reductions and dividend cuts. AT&T is sitting on more than $170 billion in debt. As part of the deal with Discovery, AT&T will get $43 billion to help reduce its debt load. (The spun-off media business will begin its independent life with $58 billion in debt.) AT&T also said it would reduce its dividend payout ratio — effectively cutting the amount it pays in half, according to Morgan Stanley. “You can call it a cut, or you can call it a re-sizing of the business,” John Stankey, AT&T’s chief executive, told DealBook. “It’s still a very, very generous dividend.” AT&T’s shares closed down 2.7 percent yesterday, and they’re further in the red in premarket trading today.

There will probably be more deals. Yesterday’s transaction could kick off more consolidation among content providers as they race for scale to compete against another giant. Candidates include what John Malone, Discovery’s chairman, calls the “free radicals” — like Lionsgate, ViacomCBS and AMC, as well as NBCUniversal and Fox. Meanwhile, Amazon is in talks to buy another independent studio, MGM.

  • In a sign of the pressure that players face to spend big to bulk up, shares in Comcast, which owns NBCUniversal, fell 5.5 percent yesterday.

Elliott Management is taking a victory lap. The activist hedge fund took on AT&T in 2019, arguing that the company should cut costs and, later, consider separating out WarnerMedia. Stankey engaged with Elliott, and — to the hedge fund’s surprise, DealBook hears — quickly moved to strike the DirecTV and Discovery deals. “AT&T has now executed on its promise,” Jesse Cohn, the Elliott executive who oversaw the investment, said in a statement.

Who stays, and who goes? David Zaslav, who will shift from running Discovery to taking over the combined group, didn’t commit to naming his team yet. But Jason Kilar, the current head of WarnerMedia — who didn’t learn of the deal talks until a few days ago — won’t be part of it. Who will is now the talk of Hollywood: Richard Plepler, the well-liked former head of HBO, could come back; Jeff Zucker, the departing head of CNN, could decide to stay; and Warner Bros. could be set to go through another wrenching executive shake-up.

What does this mean for your favorite shows? The Times’s Ed Lee and John Koblin address this and other lingering questions about the blockbuster deal.

Walmart posts bumper earnings. The retail giant reported a first-quarter profit of $2.7 billion, far exceeding analyst expectations. It also raised its forecast for the rest of the year, citing “pent-up demand” among shoppers.

Elon Musk faces pressure on multiple fronts. California’s Department of Motor Vehicles is investigating whether Tesla misled customers by touting “full self-driving” technology. Michael Burry, the short-seller featured in “The Big Short,” has made a big bet against Tesla. And the F.T.C. warned that Musk impersonators had stolen over $2 million over the past six months through cryptocurrency scams (for more on that, see below).

New York and New Jersey expand their reopening plans. New York will lift most mask requirements for people vaccinated against Covid-19 — except for places like public transit and health care facilities — beginning tomorrow. And New Jersey said that public school students would return to in-person learning in the fall.

Countries are warned to drop fossil fuels, fast. The International Energy Agency urged nations to stop approving new coal-fired plants and quickly phase out gasoline-powered vehicles as part of a detailed road map to slash carbon dioxide emissions to net zero by 2050. Installations of solar panels and wind turbines must also quadruple by 2030 to meet this goal.

The World Economic Forum cancels its in-person meeting in Singapore. The gathering, which had been postponed twice and moved from its traditional home in Davos, Switzerland, was “impossible to realize” amid uneven global vaccination programs and the spread of new coronavirus variants.

Long working hours are leading to hundreds of thousands of deaths per year, according to a new study by the World Health Organization and the International Labour Organization.

Working more than 55 hours a week in a paid job resulted in 745,000 deaths in 2016, the study estimated. About 398,000 of these deaths were due to stroke and 347,000 due to heart disease. Both physiological stress responses and changes in behavior (such as an unhealthy diet, poor sleep and reduced physical activity) are “conceivable” reasons that long hours have a negative impact on health, the authors suggest. Here are the biggest takeaways from the study:

  • Working more than 55 hours per week is dangerous. It is associated with an estimated 35 percent higher risk of stroke and 17 percent higher risk of heart disease compared with working 35 to 40 hours per week.

  • About 9 percent of the global population works long hours. In 2016, an estimated 488 million people worked more than 55 hours per week. Though the study did not examine data after 2016, “past experience has shown that working hours increased after previous economic recessions; such increases may also be associated with the Covid-19 pandemic,” the authors wrote.

  • Long hours are more dangerous than other occupational hazards. In all three years that the study examined (2000, 2010 and 2016), working long hours led to more disease than any other occupational risk factor, including exposure to carcinogens and the non-use of seatbelts at work. And the health toll of overwork worsened over time: From 2000 to 2016, the number of deaths from heart disease due to working long hours increased 42 percent, and from stroke 19 percent.

Dr. Maria Neira, a director at the World Health Organization, put the conclusion bluntly: “It’s time that we all, governments, employers and employees wake up to the fact that long working hours can lead to premature death.”

Read our recent weekend edition on the health impact of overwork — and why it can be so hard to stop.

— Alexis Goldstein of Americans for Financial Reform, in a Times Opinion guest essay on loopholes in the oversight of family funds and other private money managers.

New data from the Federal Trade Commission shows a sharp rise in consumer reports of cryptocurrency scams. The spike suggests that scammers are taking advantage of the recent buzz around digital assets while also benefiting from the ignorance of some investors, with younger people seemingly most susceptible. “There seems to be a fundamental misunderstanding of cryptocurrency,” Emma Fletcher, an F.T.C. program analyst, told DealBook.

Nearly 7,000 people reported combined losses of more than $80 million in the six months to March. That’s about 12 times more people reporting frauds than in the same period last year and a nearly 1,000 percent increase in the amount of money lost to crypto scammers.

The frauds take various forms. Some start with a “tip” on an online forum, others on dating apps or with celebrity impersonators urging a crypto transfer. Many begin on social media. All raise the same red flag — buying cryptocurrency is an investment itself, yet the scammers ask people to transfer their digital assets in order to make more crypto.

Fear of missing out may be fueling investor credulity, said Christopher Leach, an F.T.C. attorney. “Crypto is hot and new,” he said. That is a boon to scammers, who use old tricks of the trade, like creating time pressure or promising guaranteed returns. “There are obviously some cryptocurrency opportunities that are legitimate,” Leach said, though he added that investors should still “think once, twice, three times” before transferring cryptocurrencies for reasons that may seem too good to be true.


  • The oat milk maker Oatly is riding healthful food trends to a huge I.P.O., a payday for investors like the Chinese government and Blackstone. (NYT)

  • Canadian National Railway’s takeover bid for Kansas City Southern will be judged under stricter rules than a rival offer from Canadian Pacific. (Bloomberg)

  • Elliott Management has pushed Duke Energy, the big power utility, to consider breaking itself up into three companies. (WSJ)

Politics and policy

  • Gov. Andrew Cuomo of New York is set to be paid $5.1 million from his book about leading during the pandemic — which is the subject of investigations into his use of state resources to write and promote it. (NYT)

  • Nearly a quarter of respondents to a Fed survey on economic well-being said they were worse off financially now than they were a year ago. (NYT)


  • Apple has often touted its commitment to civil liberties and privacy, but internal documents show that it has made huge concessions to Beijing that put the data of customers in China at risk. (NYT)

  • The S.E.C. has begun an inquiry into the electric vehicle start-up Canoo, which went public via a SPAC merger last year. (The Verge)

Best of the rest

  • The former Treasury secretary Steven Mnuchin and the former Lehman Brothers C.E.O. Dick Fuld each sold homes for about $32 million — both at discounts to their asking prices. (Bloomberg, WSJ)

  • Investors who put millions into a luxury student dorm say they were ripped off. (NYT)

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