As AT&T shares rebounded Friday after a steep post-WarnerMedia divestment announcement plunge earlier this week, media mogul Barry Diller laid into the fickle telecom.

“They drive out talented people and then they say, ‘Never mind,” the IAC chairman said on CNBC’s Squawkbox Friday morning. 

Diller specifically mentioned CNN chief Jeff Zucker, who was set to depart the cable news network at the end of this year until AT&T announced on Monday that his parent company, WarnerMedia, would be spun off and sold to Discovery Inc. in a deal valued at $43 billion. 

It’s widely assumed that Zucker will reconsider his departure, given his reportedly warm relationship with Discovery president and CEO David Zaslav. But before that, Diller said, AT&T was on the way to driving the man who has sparked CNN’s ratings renaissance “out of the building.”

Then again, Diller could also have been speaking about WarnerMedia CEO Jason Kilar, who had reorganized the media conglomerate into a state of momentum, before learning of the Discovery deal and reportedly entering severance talks with AT&T. Or maybe Diller was talking about the nearly 55,000 former AT&T employees who have lost their jobs over the last four years—a period that followed a steep Trump-era corporate tax break that the telecom insisted at the time would grow jobs. 

Detailing AT&T’s series of missteps over the past decade, Diller said the “power of monopoly” has enabled former AT&T CEO Randall Stephenson and current chief executive John Stankey to stay in charge and keep making mistakes.

“Ma Bell should have been dead and buried by now,” Diller said. “They go into cable only to say a few years later, ‘Oh my god, we made mistake' and sell it. They go into buying DirecTV, they go into buying Time Warner, all with an idea, but certainly not a full fledged [idea]. And I believe they’ve hurt Time Warner’s assets.”

Noting that, within the complicated structure of the mostly stock $43 billion deal, it’s actually AT&T shareholders who are buying Discovery, Diller said WarnerMedia will ultimately be better managed under Zaslav. 

“It’s certainly in better hands,” he said. “How could it be in worse hands?"

Diller called Zaslav "scrappy" and noted that he built Discovery into "something from nothing.

"He’s exactly the right person to try to develop [WarnerMedia],” Diller said.

AT&T stock rebounded Friday after dropping nearly 14% earlier in the week. 

With its decision to go public with its heretofore unmentioned desire for 21st Century Fox assets currently betrothed to the The Walt Disney Co., Comcast appears to be gearing up for an epic battle that hearkens back to the old media mogul days, when oversized personalities like Sumner Redstone, Barry Diller and John Malone duked it out for control of media properties.

In a statement spurred in part by public filings by Disney and Fox for their upcoming shareholders meetings, Comcast said it was “considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney.”

With that, Comcast took off the gloves, making it clear that it was not only preparing for battle, it was more than ready. It closed its terse statement by stating while no decision had been made “at this point, the work to finance the all-cash offer and make the key regulatory filings is well advanced.”

In other words: Bring it on.

Throwback Move

The media landscape is littered with tales of bare-knuckle brawls between entertainment titans. And the current love triangle that is Comcast-Disney- Fox has jogged some memories back to 1994, when three epic media personalities — Paramount Communications chief Martin Davis, Viacom chairman Sumner Redstone and QVC chief Barry Diller — battled publicly over the movie studio.

Diller, who had worked at Paramount earlier in his career, had been rumored to be interested in making a deal for the studio, but had pulled back at the last minute, according to a 1994 article in Vanity Fair. In that piece, Diller had lunch with Davis at Paramount’s private dining room in Manhattan, deflecting the Paramount CEO’s fears that he was considering a bid for the studio. Two months later, Paramount announced a deal with Viacom, valued at about $8.2 billion. Shortly after, backed by then Tele-Communications Inc. chairman John Malone, Diller launched a hostile bid for the studio for $9.5 billion.

What followed was a five-month bloody battle between the moguls involving lawsuits, poison pills and a lot of finger-pointing. In the end, Viacom emerged the victor with a $10 billion bid. It is unlikely that Comcast will get off that cheaply this time.

MoffettNathanson senior media analyst Michael Nathanson has estimated that Comcast would likely bid about $10 billion more than Disney for the Fox assets. That, he said in a note to clients, is something Disney can easily match.

Nathanson estimated that Disney’s current offer for the Fox assets is valued at about $68 billion, $54 billion in equity and $14 billion in assumed debt. Assuming that Comcast would offer about the same as it did before — it was rejected in the early rounds of bidding because of potential regulatory concerns and the Murdoch family’s distaste for Comcast stock — its cash bid would be valued at about $78 billion in total ($64 billion in equity and $14 billion in assumed debt), according to Nathanson. “We would expect Disney to match that higher bid with $10 billion in cash added in to its existing deal,” Nathanson wrote.

Nathanson has said Iger is determined to win the Fox assets, and believes the Disney chief has “never backed down from making the right long-term strategic moves for his company because of price.”

Comcast CEO Brian Roberts, the veteran of many mega-deals ranging from industry-defining acquisitions like AT&T Broadband in 2001 and NBCUniversal in 2011 to smaller content buys like DreamWorks Animation, is no stranger to asset battles. But he has preferred to take the high road in most of his transactional endeavors. At the same time, Comcast investors appeared spooked by the company’s interest in Fox, with some interpreting it as an indication that the cable company has lost faith in its U.S. distribution business.

Although Comcast has denied that — even as it made a $31 billion formal offer for U.K. satellite company Sky, of which Fox owns a 39% stake — shares in the cable firm have plunged about 20% this year. The public admission of its interest in Fox hasn’t helped either, as Comcast shares were down about 3% since it made the announcement.

That decline has come just as Netflix, once thought of as the cable killer, has risen. Last week, Netflix’s market capitalization briefly touched $153 billion, passing Disney ($152.2 billion) and Comcast ($145.5 billion) for the first time, before settling for a tie with the Mouse House, closing May 24 with a market cap of about $152 billion. Fueling those gains has been an 82% surge in Netflix’s share price since December.

Disney’s Big War Chest

Disney, which has low leverage — about 1.2 times forward-looking cash flow — and $9 billion in free cash flow, can afford a bidding war with Comcast. Nathanson estimated borrowing the additional $10 billion needed to compete with the Comcast bid would increase its leverage ratio to about 1.6 times at the end of 2020, not a major concern for ratings agencies.

Comcast, on the other hand, would see its debt balloon to $164 billion in a Fox deal, according to Moody’s Investors Service. In a note, it said a Fox bid, estimated at about $60 billion for the equity, would drive Comcast’s overall leverage past 4.3 times cash flow, endangering its investment-grade debt rating.

Moody’s placed Comcast’s A3 debt ratings on review for possible downgrade last week, adding that a Fox bid would make it the second highest leveraged media company behind AT&T-Time Warner. Earlier, Moody’s had warned that Comcast’s willingness to increase its debt load that much represents a big departure from past practices and stated commitments and creates “significant doubts for the future.”

But both companies see Fox as an integral part of that future and are expected to bid hard and high. Sanford Bernstein analyst Todd Juenger in a report earlier this month said Disney and Comcast believe the business has evolved to a point where there will be only a few global scale players and Fox is “the seminal defining point,” in determining who they will be.

“And therefore, we think both Comcast and Disney are likely to pay a high price,” Juenger wrote.

Aereo, the embattled provider of broadband TV and cloud DVR services, fired on all fronts last week as it braced for its Supreme Court showdown with broadcasters this week.

The multifaceted media blitz, which comes ahead of Aereo’s defense that gets underway on Tuesday (April 22), included Aereo’s launch of a website that advocates its position, as top executives and investors made appearances on TV and talk shows or stated their positions in high-profile publications.

On the Web, Aereo launched ProtectMyAntenna.org, a site emphasizing its position that its service merely provides remote access to antennas that capture free over-the-air digital TV signals — not performances which, as the broadcasters claim, are subject to copyright payments.

“We remain steadfast in our conviction that Aereo’s cloud-based antenna and DVR technology falls squarely within the law,” Aereo founder and CEO Chet Kanojia said in a letter to subscribers. “We have every hope and confidence that the court will validate and preserve a consumer’s right to access local over-the-air television using an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.”

Kanojia also offered some choice words on C-SPAN’s Communicators series last week, holding that broadcasters’ arguments are baseless and even “insane” in their characterizing of Aereo as a Rube Goldberg contraption set up to circumvent the law.

Kanojia deflected questions asking why cable operators should have to pay for broadcast signals, but Aereo does not, arguing that MSOs don’t pay a copyright fee for “in-market” transmissions and that Aereo is not a program distributor but a company that provides a technology platform.

“There is a distinction between cable companies, who are monopolies, and equipment providers, whose job it is to build equipment that adds value to a consumer’s life,” Kanojia said.

IAC chairman Barry Diller, the former head of Fox and one of Aereo’s minority investors, defended the company in an op-ed piece in The Wall Street Journal, chastizing the Obama administration for taking the broadcasters’ side.

“[B]roadcasters claim Aereo is ‘stealing’ their content,” Diller wrote. “Why is the industry pushing to punish those who wish to receive their television through airwaves, which are not owned by broadcasters? The answer is obvious: Broadcasters make more money when consumers are steered away from over-the-air program delivery and toward cable and satellite systems that pay the broadcasters retransmission fees.”

Kanojia also gave an interview to Katie Couric of Yahoo News, echoing Diller’s earlier position that Aereo has no real Plan B, and may have to go out of business if it loses the case.

In a research report, Bernstein Research analyst Todd Juenger suggested that if Aereo loses, it won’t be long before it and others develop technologies and methods that work around the court’s ruling.

Nine justices will hear the case, and the high court is expected to announce its judgment in June.

The Wall Street Journal, whose parent, News Corp., also owns Fox, gave IAC chairman Barry Diller -- former head of Fox -- op ed space Thursday to defend Aereo, the online TV station delivery service Fox is opposing as a copyright infringer.

Diller is a minority investor in Aereo, and he took aim at the Obama Administration for not backing Aereo.

Diller's piece comes days before the Supreme Court is to hear oral arguments in the case on April 22.

In the piece, Diller says that broadcasters don't own the airwaves and shouldn't be allowed to keep viewers from watching free TV on the device of their choice via an "antenna in the cloud."

"[B]roadcasters claim Aereo is "stealing" their content. Why is the industry pushing to punish those who wish to receive their television through airwaves, which are not owned by broadcasters? The answer is obvious: Broadcasters make more money when consumers are steered away from over-the-air program delivery and toward cable and satellite systems that pay the broadcasters retransmission fees."

Diller took aim at the Administration for backing broadcasters in the fight. "Broadcasters have now corralled the White House into joining their efforts to crush any innovation that challenges the status quo and the industry's lucrative business model," he said.

The Solicitor General's office filed a friend of the court brief in support of broadcasters saying Aereo's delivery of over-the-air TV signals via the Internet without payment is a public performance in violation of copyright.

The SG's office also agrees with broadcasters that the Supreme Court can rule against Aereo without calling into question the entire cloud storage regime.

"No one has offered any coherent factual or legal basis that justifies the broadcasters'—and now the administration's—attempts to condemn consumers to the use of an antenna from a bygone era," asserted Diller. "It is unfortunate that the broadcasters and the administration have aligned themselves against competition, choice and the consumer. The Supreme Court should set them straight."

The scary headline a couple of days ago noted a hyperbolic plea by big time Aereo investor Barry Diller, to the effect that if the U.S. Supreme Court (SCOTUS) turns thumbs down on the Aereo service after oral arguments the morning of Tuesday, April 22, that the Aereo service is essentially “dead.”

Frankly, I find that ridiculous. Indeed, that’s just poppycock! (Maybe Barry D. thought it was April 1, and this was his version of an April Fool’s joke.)

Years ago, by way of explanation, former ABC TV vice president Rich Wolf, made a brilliant and quite perceptive comment about Aereo, which was to the effect of “Why didn’t a broadcaster unveil an Aereo-like service first, before Aereo did?” His implication was that such a move by a broadcaster would have worked, and would have been the “right way” from the beginning to implement a new technology like Aereo’s.

Wolf (now EVP of The Switch) made a very important question and implication, suggesting a very easy solution to the Aereo dilemma: Aereo needs to either sell its entire operation to a broadcaster or broadcasters (so that the broadcasters and their value chain can control the Aereo ecosystem); or Aereo, at least, needs to let the broadcasters become a part of the operation, and thus the revenues.

I am reminded of a meeting I was a part of years ago (before Aereo launched), when a broadcaster asked me, “Where’s my compensation when Aereo re-telecasts my content?” and I didn’t have an answer for him. But his Q also implied the obvious: make the broadcaster and the content owner a part of the mix, and you’ve probably got a great new animal, ready to range and roam successfully, in the hyper-competitive world of modern video!  

This is important, because, my best gut feeling is that Diller’s SCOTUS concern is well-placed: the U.S. Supreme Court is going to tell Aereo that it cannot operate as it is currently doing, which leaves the broadcaster distributors and content owners almost completely out of the loop, so to speak. And meanwhile, under the current scheme, Aereo takes the distributors’ and content owners’ copyrighted material and resells it to consumers at a profit to Aereo, and very nearly (depending upon how you measure the effectiveness of advertising these days) to Aereo only. That just doesn’t make sense.

But figure out a way to get some valid compensation to those TV distributors, and their partners, the content owners, and you are on your way.

Call it Aereo 2.0, post-SCOTUS, and Aereo survives, or perhaps, even thrives!

Jimmy Schaeffler is a telecom author and chairman and CSO of the Carmel-by-the-Sea-based streaming, broadcast and pay TV/video consultancy, The Carmel Group (www.carmelgroup.com).