What the IAC MGM Hypothesis framework helped to shed light on is how narrow this bet on WarnerMedia and HBO Max is: Stankey’s long-term vision is that a media business has a definable ROI when it helps to solve for churn. A reduction of one basis point of churn nominally pays for the WarnerMedia acquisition on its own, with $15MM to spare. AT&T investors should love that.
But, the lurking question that AT&T continues to face is what it means for AT&T to own and operate a media business. There is a quote in the piece from Parnassus analyst Andrew Choi:
“Media’s just not a great place to be from an investment perspective. Hollywood’s always soaked up as much capital as possible.”
We know how John Stankey continues to aggressively sell his operational vision with WarnerMedia as “long-term”. But, both the WSJ piece and recent COVID and non-COVID related developments from this week shed light on why this vision continues to invite skepticism.

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