AT&T CEO John Stankey said Monday that the company’s focus on its connectivity business in the US meant it didn’t have the global reach to grow a global streaming business with WarnerMedia, and the company decided it was “time to unleash the media assets” of WarnerMedia to Discovery.

AT&T announced on May 17th that it would spin off its WarnerMedia business to merge it with TV company Discovery. The resulting entity, which has yet to be named and is still awaiting regulatory approval, will be a competitor in the cable space and for streaming content giants like Netflix and Disney; WarnerMedia owns HBO, CNN, Cartoon Network, TBS, TNT, and the Warner Bros. movie studio, while Discovery has a number of channels that focus more on reality TV, including HGTV, Animal Planet, Food Network, and TLC. Each also has its own streaming platform in HBO Max and Discovery Plus.

“What’s become clear is that the opportunity for direct relationships with customers is truly going to be a global opportunity,” Stankey said of the streaming sector. “As a result of that, when you look at the opportunity to grow a fantastic subscriber base we kind of looked at this and said, ‘it’s time to unleash the media assets to go and seize a multi-hundred-billion-dollar opportunity.’”

Streaming is “a little bit of a different shareholder base and management base than what we’d typically have” as part of AT&T’s more traditional lines of business, he said.

AT&T acquired WarnerMedia (which was known as TimeWarner at the time) in 2016 for $85.4 billion. The deal was approved in 2018.

Stankey made the comments during the JP Morgan Global Technology, Media and Communications Conference. He bristled slightly when interviewer John Cusick, a JP Morgan analyst, asked him about his vision for the future of AT&T, noting “you’ve reversed nearly six years of strategic change at AT&T in three months.”

Stankey said he would “contest the characterization that we did it in three months,” adding, “We don’t wake up one day and say ‘hey today’s the day I think we ought to go find a transaction.’”

But with less than three years from when the WarnerMedia deal was approved to the time AT&T decided to spin it off, the change in direction struck many as sudden, but it also seemed to make sense. Telecom companies have tried to run media businesses with limited success; earlier this month, for instance, Verizon sold AOL and Yahoo for less than half of what it paid a few years prior.

And as The Washington Post’s Steven Zeitchik noted in his analysis of the deal, AT&T did little to court business in Hollywood during the time it owned WarnerMedia. The surprise announcement in December that WarnerMedia would release all of its 2021 theatrical movies on HBO Max drew widespread criticism from the entertainment industry.

Still, Stankey claimed Monday that AT&T’s ownership of WarnerMedia helped to grow HBO Max and HBO’s linear channel to a combined 44 million US subscribers in the year since HBO Max launched. “I think realistically, HBO Max would not be where it is today if not for the strength of the two combined companies,” he said.

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