“It would have been an amazing merger,” said David Barden, a senior research analyst at Bank of America. “It would have perpetuated the AT&T growth monster through acquisitions, not through organic products, but it failed.”
Next, Stephenson looked at the attractive profit margins found in media and entertainment. In 2014, he announced a deal for DirecTV, a transaction that he promised would “redefine the industry.”
But AT&T bought the pay-TV industry at its peak. Soon after it acquired satellite service, consumers left in droves.
“One thing they didn’t do, that they couldn’t have anticipated, was that 2014 was the last year that linear video would grow,” Barden said, referring to the cable TV business. “Because who was out there backstage? This little company called Netflix. ” Customers began cutting their cables and cable subscriptions began their decline.
Then came Time Warner. Many analysts pointed out that owning a business that makes money by distributing shows and movies as widely as possible would not give AT&T any advantage. In other words, it would still have to license HBO and CNN to rivals like Verizon’s television service or to cable giants like Comcast. AT&T would find it difficult to justify keeping the content to itself.
The Justice Department sued AT&T to block the deal, but lost the case in court.
Makan Delrahim, the former Justice Department antitrust chief who oversaw the lawsuit, said in an interview that the rampant AT&T deal was a “classic case” of corporate misconduct. The company “did a number of mergers and acquisitions and it really wasn’t rational for running its business,” he said, “T-Mobile, DirecTV and Time Warner. And this is the result.”
Whitacre, the founding CEO of modern AT&T, offered another opinion.
“The deals that we made while I was president, which was for a long time, was to acquire the businesses that we were familiar with, the businesses that we were in,” he said in an interview. “And when I left, that changed.”
Whitacre, who is still an AT&T shareholder, said he liked the deal with Discovery, which brought the company back to “where we came from.”