Former Time Warner CEO Jeff Bewkes, who engineered the sale of the entertainment giant to AT&T, is now describing the phone company’s management of what has become WarnerMedia as “malpractice.”
AT&T bought Time Warner in 2016 for $85 billion as part of a strategy to acquire entertainment assets to bolster its mobile phone business. This year, it has unwound that strategy, by spinning off DirecTV, an earlier expensive acquisition, and by agreeing to sell WarnerMedia to Discovery.
Bewkes, AT&T CEO John Stankey and Discovery CEO David Zaslav are among the high-profile executives interviewed for a new book about HBO by James Andrew Miller titled Tinderbox: HBO’s Ruthless Pursuit of New Frontiers.
According to quotes from the book confirmed by The Wall Street Journal, Bewkes complains that AT&T execs didn’t listen to Time Warner execs after the merger. In fact, most of the top executives of Time Warner’s key units, HBO, Turner and Warner Bros., were gone within a year after the merger was approved.
Bewkes said he and other WarnerMedia board members thought AT&T “would basically leave our people alone." Bewkes said “we didn’t think they would go to such a level of malpractice as to not listen to anybody … even though they themselves had no experience in those areas.”
AT&T’s strategy was to combine HBO, Turner and Warner Bros. as it pursued a direct-to-consumer strategy, a longtime AT&T executive, was put in charge of WarnerMedia, and the top HBO, Turner and Warner Bros. execs all soon departed.
In the book, Stankey said change was called for at WarnerMedia.
“If you are in an acquisition and somebody pays a premium for your stock, by definition it means something has to change,” Stankey said. “If you paid a premium for an operation and you continue to operate it exactly the same way, you never pay back the premium.”
Stankey said the strategy of buying Time Warner was sound, but that shareholders were impatient and didn’t recognize what WarnerMedia was accomplishing. “They refused to give us credit for that progress,” he said.
That led to the deal with Discovery.
Discovery CEO David Zaslav told the book’s author that “if we’re successful, and I believe we will be, there will be Harvard Business School case studies on this deal.” ■
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