AT&T and Warner Media: A Failed Love Affair

lot about that at the end of this episode. Our first episode in this series trace the very early history of Time Incorporated, that is, the publishing company that was on you know, one side of the episode and Warner Brothers known as the Movie, TV and music studio on the other side of that podcast, and trace their evolutions up to their merger in the late night teen eighties.

Our second episode backtracked a little bit to talk about the early days of cable TV and the emergence of HBO and then how Time invested in that particular endeavor and thus brought HBO into the mix upon the Time Warner merger, so HBO became part of that group. And we also talked about the disastrous merger between Time Warner and America Online or A O L and how that

deal went sour even while it was being executed. Between the announcement that the merger was going to happen and the completion of that deal, which took about a year, the whole dot com industry had a massive financial collapse. So that acquisition completed in two thousand one, and in two thousand two, A o. L. Time Warner had the worst financial quarter ever of any company up to that point, losing fifty four point two four billion dollars in a

single quarter that is just three months. Yikes. For about a decade, A O. L. Time Warner struggled to get its footing and tried to become the new model for all media companies, you know, combining traditional media like music, publishing, movies, and TV with the futuristic world enabled by the Internet, which is what we're seeing today, by the way, Only back then it just totally didn't work. Now, to be fair, there were a lot of extenuating circumstances that contributed to that,

like the aforementioned dot com crash that was a big one. Uh, there was the terrorist attack in two thousand one that was another big one that There were general economic recessions that contributed to them. Also, the company at that point had changed its name to Time Warner Incorporated in two thousand three, dropped the A O L. I mean A

L was still part of the mix. But because of that dot com drop and because of some scandals that A O L was pulled into or was you know, uh, some scandals that involved A O L. It's not that A was pulled into it. They were complicit in them.

I feel like the company felt it was in the best interests of the organization to rename itself and kind of you know, not advertised, that was part of A O L. Still for me and for a lot of folks of that time period, we still called it A O L Time Warner for a while, and I mean, like I said, A O L was still part of

the company at that point. Well, anyway, we're gonna look a little bit more today at what happened towards the end of the A O L Time Warner days and then see what happened with Warner following that failed marriage between old and new media. And one of the things I failed to mention in my last episode, and honestly, I hadn't even seen this bit of the history while I was doing my research, So this was due to

my own ignorance. Was that during the time of A. O. L. Time Warner, the company divested itself of a major part of its assets, and that part was that in two thousand three, the company sold off its music division to the tune Ha Ha of about two point three billion dollars according to the New York Times, although some other sources put it as high as two point six billion, so I'm not sure who's in the right there. Anyway, the reason for that move was that A. O. L.

Time Warner was in a lot of debt. And I've talked about this previously, like whenever you're talking about mergers and acquisitions, typically you're talking about companies that are really over extending themselves in order to acquire another company, and then they have to figure out how are they going to manage all the debt that results from that. And that's that's before you get into things like you know, market crashes in really bad years. So there's this enormous

amount of debt to settle. And when the two companies initiated their merger, Time Warner was struggling a little bit and A. O. L. Was was king of the mountain, but then just a few months into the acquisition process, we saw that switch places right A O L suddenly saw a massive drop in its market value as its stock price plummeted, and suddenly the company that had been flushed with cash as an Internet giant was now in a really rough place financially as a giant media company.

So who bought the music group? Well, the party that made that purchase was led by Edgar Bronfman Jr. Bronfman's family had run the company Sea Gram since the nineteen twenties. Uh So, the Bronfman family had a whiskey distillery company and then Seagram. The Seagram family also had a similar company, and the two companies merged. The Bronthman's effectively took over,

but they kept the Seagram name. Edgar Bronfman Senior was chairman and CEO of this company from the nineteen seventies until the mid nineteen nineties, and in that time the Seagroom company diversified and through a complicated series of events, ended up becoming the largest shareholder of the DuPont Company, which you might remember played a really big part in

our episodes about General Motors a few months ago. So Edgar Jr. Took over the business for his dad in nineteen and he made the controversial deal to allow the DuPont family to buy back the shares held by Seagram for around nine billion dollars. They said, well, Seagram holds these enormous shares in DuPont, That's where a lot of money is coming from. But I kind of want to use that money to do other stuff, so I'm gonna

sell it back to them. Now. I say that this was controversial because Seagram's ownership of that steak accounted for nearly seventy percent of the company's revenue, So, in other words, Seagram's dependence upon DuPont was very high, So getting rid of that meant that sevent of your revenue source is just gone. Then Ed Junior began to invest that money into the entertainment industry, buying up controlling interests in m c A, which was the parent company for Universal Pictures.

We'll talk more about that a little bit later in this episode two, and he also purchased PolyGram record label. Things did not go smoothly, and so Ed Junior led Seagram into a deal that would see Vivendi acquire Seagrum in an all stock transaction into thousand. Vivendi then sold off the beverage division of Seagram, you know, the part of the company that was the core of the business at the beginning. Anyway, things didn't work out, and within a couple of years Bronfman had stepped down from his

position within Vivendi slash Seagrum. Perhaps he viewed the acquisition of Warner's Music division as a second chance to have a go at running a company in the entertainment industry. So he had already had this one go of trying to become an entertainment mogul, and that didn't work out, and Vivindi came in and took up the gap. So now he was trying it again. He was going to

buy the Warner Music Group. Part of the negotiation included the rights to use the name Warner Music Group, even though this new company was no longer part of the Warner family of companies. So w MG would go public in two thousand five, and Bronfman would hold on to w MG until two thousand eleven, when he would sell it to a company called Access Industries for more than three billion dollars. Bronfman would step down as chairman of the board in two thousand and twelve. Apparently at one

point was considering purchasing Time Incorporated. But that's kind of peaking ahead a little bit. So by two thousand four, the Warner Media empire no longer included all those music studios like Warner Records, Electra Atlantic, Rhino Entertainment, and more. All of these were part of Warner Music Group. Word Music Group still existed, but was no longer connected to Time Warner. Again super confusing. Now I mentioned that the company spun off its cable service division in two thousand nine.

That was Time Warner Cable, so we're gonna jump over that. And that was also the year that Time Warner and A O L would part ways, and Time Warner spun off A O L to do that, which still makes me think that businesses all food do because effectively A O L acquired Time Warner back in two thousand and then we see in two thousand nine Time Warner spinning off A O L, which really just shows how far

the mighty had fallen at that point. All right, so now we're up to Time Warner, freshly divorced from A O L, tried to find its new path Turner Sports division within Time Warner, because remember at this point, time

Warner includes the Turner family of products like Turner Broadcasting. Well, Turner Sports signed a fourteen year deal with the National Collegiate Athletic Association or n C Double A, and that agreement gave Turner the job of managing all the digital platforms for the n C Double A and also gave Turner more access to coverage of all eight eight inn C Double A championships, So that was a pretty big deal. That year also saw Time Warner expand operations in Chile.

So the company already operated CNN Chile, but in it acquired a television station called Chile Vision from the former president of Chile. And this gives me a quick chance to talk about the cable channel side of business. I have some insight into this because I used to work for a company that, among other things, was a cable channel company. So let's say you happen to own a group of cable channels. You've got one that's your primary channel. This is the one that lots of people are familiar with.

It's the most famous of your channels, and maybe you've got a few second tier channels that are popular, but they're just not as widely known as your primary one. And then you've got maybe a few other channels that are more niche in appeal and so they have lower viewer numbers. Now, as a cable channel owner, your job

is to get your channels carried on various cable service providers. Right, you're making the content, you have to make the deals for the cable companies that service homes to carry your content. So you want to make these deals with these various cable service companies that provide cable feeds to customers. So they're the ones who own the pipes. You're the one who's making the content. So you negotiate deals that are

called carriage agreements with these various cable companies. And typically the way this works is that you, as an owner of these cable channels, you want all of those channels to find a space on the feeds of these various cable television providers. Now, the television providers might only really be interested in that primary channel, or maybe they want

the primary and maybe the secondary channels. But you end up drafting a deal that requires the cable TV providers to carry all of your channels or else they don't get any of them. So for the beginning of your business, that's really your focus, your negotiating and then renegotiating carriage agreements with various cable TV providers and satellite providers. But eventually you're gonna hit market saturation. You're going to get your channels on pretty much every major provider, and then

there's nowhere else to go. So now you're also going to make money by selling ads space on your programming

to various advertisers. Assuming you're not just an outright pay TV channel, you're gonna have ads, so the primary channel is likely going to be your premium products, right, advertisers are going to spend more money to put ads against those popular programs because of course more people are watching those and it is harder to sell ad space on the niche programming channels, so often add deals will actually include ad space on some of the smaller channels in

addition to prime space on the big ones. It all tends to get wrapped up into these very complicated ad deals. But again, eventually you start to maximize your profits and you don't have really anywhere else to go. So what do you do? I mean, you pretty much saturated your market, you don't have more channels to put on cable, so you can't add stuff you've already carried. You're already carried about all the major cable service providers, so there's no

one to else, you know, to jump onto. So unless you knock it out of the park with a few real big hit shows, your ad revenues are going to start to plateau. And if you do hit it out of the park, if you do make like the next Blockbuster TV show, well, in order to grow in subsequent years, you've got to do it again. It's hard enough to get that to work once, let alone multiple times. So one solution at this point is to expand into new markets.

This is why if you follow news about cable companies, as in you know, the companies that are making cable television content, you'll frequently see that they announced that they're expanding into places like South America or Asia. The companies will develop regional offices that are dedicated to creating programming for those markets or their localizing content that you know,

originated from somewhere else. And this is one of the few opportunities for growth once you reach this stage, and if it weren't for the fact that we typically judge the health and success of a business by how much it grows year over year. This wouldn't be a big deal. You know, you could just operate as is and you'd be fine, But that's not how things work. We do

judge companies on that metric of growth. That means that an entity like Time Warner or Discovery often has to look at ways to grow beyond regional borders in order to appear healthy, because it's not just good enough to do good business, You've gotta grow. So what happens once a company starts to approach a global reach, Well, I suppose they could weep like Alexander, for there are no more worlds to conquer. Or they could try something else,

like merging with another big media company. We'll get back to that anyway. Beyond Chile, Time Warner made some moves to increase its ownership stake in various regional HBO networks. So HBO was kind of operating like a franchise. So Time Warner owned some, but not all, of these regionally focused branches of h BO, which were you know, co owned by other partners. So companies like HBO Latin America

Group UH. Time Warner HBO purchased a larger stake of that particular group in two for more than two hundred million dollars, which gave HBO an eighty percent ownership in the Latin America Group. Similarly, over in Europe, HBO bought out its partners that had some ownership in HBO Europe UH. The companies spent about a hundred thirty six you know million bucks in order to buy those partners out. And Time Warner also purchased a company called Shed Media in

twenty for one dred million pounds. Now, as that implies, Shed Media was a UK based TV content creator and distributor and behind such shows as Waterloo Road and Footballers Wives. I admit I'm not familiar with those shows, but anyway. In twenty ten, Time Warner acquired a majority share in shed Media. The the management team still owned a bit more than of the company at that point. In fourteen, Time Warner increased its ownership and purchased the remainder of

the company. Then they transformed Shed Media into Warner Brothers Television Productions UK in the Warner Brothers Home Entertainment Group division of Time Warner acquired an online social platform dedicated to helping people discover movies that they might be interested in.

That site was called flick Ster, and at that point, Flickster was also the parent company of another site that relates to movies, one called Rotten Tomatoes, and that would raise a few questions which I'll talk about after we take this quick break. Run Tomatoes started out as a pet project for Sinduong. It was just a site at aggregated movie critic film reviews so that people could, you know, pop on over to the site, look at the reviews, and get an idea about whether or not they might

like a particular film. So it was a pretty simple idea. Now obviously that grew quite a bit, with the site developing its own metrics to judge the quote unquote freshness of a movie. Uh. This is essentially looking at all of the positive reviews and all of the negative reviews and doing some quick math on that ratio. So if there are more positive than negative reviews of a film, then that film is fresh, even if those positive reviews

are just lukewarm. So if you see a high freshness rating on a movie, it doesn't necessarily mean that movie is spectacular or better than movies that have lower ratings. It just means that more critics gave it a positive review. But that positive review might have been like, it's okay, right as opposed to this thing is amazing anyway. I've done a full episode about Atten Tomatoes, so I'm not

gonna go over the whole thing here. I g N Entertainment bought Rotten Tomatoes in two thousand four, but then News Corps, the parent company of Fox at the time, acquired I g N in two thousand five. Five years later, the I g N division of News Corps sold Rotten Tomatoes to flix Stir. Okay, so let's flip over to flixster just really quickly surround. Chari and Joe Greenstein founded

flixter back in two thousand six. Flick Stir was a social media platform centered around movies, and you could watch trailers on the site and explore posts about new and upcoming films. Clearly, the site grew large enough to purchase Rotten Tomatoes from I g N, and then in Warner

came calling. People began to express some concern that a company that was in the movie business, that is Time Warner with Warner Brothers Studios was purchasing a different come an, this one being Rotten Tomatoes that was in the movie review business. So would that mean that Warner Brothers would pressure Rotten Tomatoes to make sure that Warner Brothers films got a fresh rating. Turned out that concern was largely

not a problem, though people would occasionally make accusations otherwise. Um, but it was, you know, something to think about, Like, there is clearly a conflict of interest if you are the owner of both a movie production studio and a

movie review aggregator. Anyway, the incorporation of flick Stir into Warner Brothers was supposed to lead to a bunch of new digital products that would give Time Warner opportunities to reach customers in new ways, not that different from how you were looking at a O L and Time Warner just a couple of years earlier. But by twenty sixteen

things had changed. Either Time Warner had gotten all it needed out of the arrangement or the arrangement just didn't work out, and so Time Warner sold off Flixster and Rotten Tomatoes to fan Dango. Now, Time Warner got a little stake of ownership in fan Dango as a result of that, which is also complicated because fan Dango's parent company is NBC Universal, and that means that now two major media companies, both of which have film divisions, have

some ownership of Rotten Tomatoes. The conflict of interest concerned remains intact, though again from what I've seen, there's been little evidence of any actual manipulation. The Rotten Tomatoes scores for movies out of w B and Universal don't seem like they've been boosted at all, so at least there's that, all right. So that Time Warner acquisition of flick Ster happened inven and we're gonna skip forward a little bit because a lot of the nitty gritty stuff is just

not that interesting, gets tiresome. It's mostly like smaller acquisitions, so we're gonna move up to twent that year, Time Warner was looking to actually offload a property rather than make another acquisition, so in this case, it was the publishing arm of Time Incorporated. So originally, Time Warner entered

into discussions with another company called Meredith Corporation. Like Time Warner, Meredith is a media conglomerate company, and one of the things Meredith owns is a Publishing arm a magazine publishing arm, and arguably I would say it's best known for the magazine Better Homes and Gardens, which always makes me think of the musical Little Shop of Horrors. But this is not a show where you know, I sing stuff typically, so to endure that kind of punishment, you should listen

to large nerd Dron Collider. Anyway, the talks between Time Warner and Meredith Corporation focused on the two companies combining their publishing divisions into a single independent entity, but Meredith eventually backed away from that deal, so Time Warner went with their backup plan, and that was to spin off the publishing to vision of Time Incorporated into its own independent company. And it's easy to understand why they wanted to do this, by the publishing world in general was

really struggling. The Web had disrupted the industry. Subscriber numbers were dropping, advertising revenues were following suit. So across the board, companies were scrambling to find solutions as they saw revenues decrease. For Time Warner, this became a point of concern because you had a company that you know, kind of wanted to restructure more around television and film. So Time Incorporated

got spun off from Time Warner. In Time Warner retained the name Time Warner even though the Time part was gone. Now as for Time Incorporated, that company became a publicly traded media company, and then in another company came around and acquired Time inc. So what company was that? Well, it was Meredith Corporation, you know, the same company that had been in discussions with Time Warner about combining their publishing arms of the respective entities, and now Meredith had

scooped up Time all for its own. In fourteen, Time Warner got another suitor. This time it was twenty first Century Fox. So just imagine how different our world would be if that deal had gone through. If Fox had purchased Time Warner, and then subsequently, if Disney had continued to go on and purchase Fox, that would mean that Disney would own both Marvel and d C Comics at the same time. Imagine those possibilities, except, of course, I suspect that the US government would have thrown up some

major roadblocks to that kind of merger. At that point. The US allowed a lot of really big media companies to get really really bigger, sometimes in extremely questionable ways. But I think if Disney were to own the sets of both Fox and Warner Brothers, that might be a bridge too far. That would probably be saying that Disney owns way too many of the movie studios that still exist. So it's a moot point because it never went through.

Fox made an offer of eighty five dollars per share of Time Warner stock, which was a deal valued at around eighty billion dollars at the time, but the board of directors over at Time Warner said, yeah, nah, thanks, we're good. So Fox's bid to acquire Time Warner fizzled out. If the deal had gone through, we would have seen CNN gets spun off in some way because Century Fox also owned you know, the Fox News Network, competing twenty four hour news channel, so that would have also been

a conflict. So CNN would have had to have gone if that deal went through. Of course it didn't. Okay, Now we got to take a step back and see what else was going on in the media landscape around this time, that time being you know, the decade between twenty and twenty twenty, because that's going to help explain the next stage of events for Time Warner and Honestly, the key to the whole story is the concept of consolidation,

or of various companies coming together to form truly enormous organizations. Now, the really big one we need to talk about was and still is Comcast. We got to do a super fast summary of a ton of stuff that happened with Comcast, and that involves a lot of other properties. So here

we go, all right, way way way back. Just after World War One, you had the Radio Corporation of America or r c A, which in turn ended up being you know, owned by General Electric or g E. So our c A created a couple of different radio station networks, both of which were called NBC for National Broadcast Corporation.

One of those two would split off to become ABC, but the other one remained n B e C. Upon the rise of television, NBC branched out being just a radio network and also became a television network as well. Now we're gonna skip forward to the nineteen eighties. Through a story that I have covered in other episodes, General Electric reacquired NBC. UH they had been forced to divest themselves of NBC and r c A back in nineteen thirty two, but by nine six, apparently it was tote

school for GE to buy them back. Apparently, whatever the anti competitive nature was back in the thirties no longer existed in the Grand Old eighties, so g E bought our c A and NBC back then. They ended up selling off most of our CIA's assets, but they kept NBC. NBC then began to acquire other companies to diversify its holdings, so it acquired cable channels like Bravo. It also acquired

the Spanish speaking channel Telemundo. And in parallel with that story we've got the story of Universal Studios is in the movie studio originally founded back in nineteen twelve, it had changed dramatically, Like like Warner Brothers. It had a heyday, and then the Department of Justice and various UH anti monopoly parties really broke up the movie industry, probably probably

for the best in the nineteen fifties and sixties. So by the nineteen sixties they were in a very different place than the company was when it was at its height in like the twenties and thirties. So the Music Corporation of America or m c A, which I mentioned earlier in this episode acquired Universal in the nineteen sixties. But there's always a bigger fish, right, So skip ahead to and then Hannah Sonic, which at the time was known as Matt Sushida Electric, acquired m c A. Because

all these media stories are really messy. In ninety five, Matt Sushida sold off eight of its ownership in m c A and thus, by extension Universal to Seagram, which again I mentioned earlier in this episode. And as I said, Seagram was best known as a whiskey distillery, so you know all of this tracks anyway. In two thousand a French water and utility and media company called Vivendi acquired

Sea Graham because again bigger fish. So now Vivendi owned Sea Gram and thus by extension, owned controlling interest in m c A, and thus by extension in Universal, so the overall company became known as Vivendi Universal. Then in two thousand four, Vivendi Universal sold off eighty percent of Vivendi Universal Entertainment to drumroll please General Electric. Yeah, the same company that had purchased, or rather bought back NBC in bought up of the control of Vivendi Universal Entertainment.

So ge renames this now mega media company NBC Universal all one word, combining the media assets of both companies. NBC had eight share in this concern, with Vivindy holding the other. G E would then end up buying up the rest of Vivendy steak In, and thus GE had full ownership of the full thing by that point. That's same year as when Comcast, the cable company, swooped in

and then purchased from g E a steak in NBC Universal. Now, the fact that the FCC cleared this deal still blows my mind because Comcast is a cable television and internet service provider and it was buying up one of the largest media companies in the world. So now you had a corporation was not only in the business of providing the pipes, but also in the business of creating a lot of content going through those pipes. This was the kind of stuff that was making people nervous about net

neutrality and anti competitive practices. It was the kind of thing that the US government had frowned upon just a few decades earlier, when the government had told movie studios that they weren't allowed to control production, processing, distribution, and exhibition. So clearly we were in a different world at this point. Anyway, Comcast bought out the remainder of g S stake at NBC Universal in and that story is, as you probably guessed, way more complicated than what I've just laid out in

that quick summary. It really shows that the history of media companies is incredibly challenging to tell, just because of all the different entities that become involved over the years. But for the purposes of our story, the important bit here is that comcasts acquisition of NBC Universal sent shock waves not just through the entertainment industry, but also the telecommunications industry, and A T and T, a major competitor to Comcast, began to consider an acquisition of its own.

This brings us back to good old Time Warner. Yeah, the company had ditched Time Incorporated, but it kept the name. It no longer had Time Warner Cable that got spun off years earlier. That probably was a good thing, because if A. T and T was making a move to buy Time Warner, it probably would have had to get rid of Time Warner Cable anyway, because otherwise that would

have been a conflict. Uh. It also was no longer the owner of Warner Music group, but it did still have its movie and television production units, plus it's digital assets. A T and T decided that it needed to make a move to get on the same playing ground as Comcast. There was also another player and upstart in the media game that was putting pressure on both A T and

T and Comcast, as well as other media companies. This company had started off as a kind of humble competitor to video rental stores in general and the company Blockbuster in particular, and that company is, of course Netflix see Netflix represented a threat to cable channels and cable companies With streaming media. The number of new subscriptions for cable TV ended up changing directions and began to go on the decline, which meant that companies like Comcast and A

T and T had another thing to worry about. If you were people were subscribing to cable TV services, or worse yet, if existing subscribers started to cancel their service, well that's a major hit to revenue. And if people were relying more heavily on the Internet as the delivery system for entertainment, that threatened the whole media structure. So with those factors in mind, A T. T made a

move to acquired Time Warner in two thousand sixteen. When we come back, I'll talk about how that shook out and why today A T n T is looking to divest itself of Warner Media. But first, let's take another quick break, all right. So A T and T announces its plan in to acquire Time Warner. The US government had something to say about that. The U s Department of Justice, under the administration of Donald Trump, filed a

lawsuit in an attempt to block the merger. Now, according to Trump, the merger would put quote too much concentration of power in the hands of two few end quote.

And you know what, I find it hard to disagree with that, though I do need to point out that if you do the full quote donald Trump's statement, it indicates that he was also kind of upset about CNN in general, and CNN would have been part of this deal because CNN was part of Time Warner, and then A T and T would be buying CNN, and his personal gripe against CNN was enough to make him speak

out against this kind of thing. Now, I also mentioned that with Comcast and NBC Universal, there already was a massive precedent for exactly this kind of merger, Like, it would seem pretty hypocritical for the U. S. Government to tell A T and T, hey, you can't buy a media company when Comcast had just gone and done the same thing a few years earlier. So I just happened to think that the government should have raised some concerns back during the Comcast an NBC Universal deal. Honestly, well,

this matter went to trial. The trial lasted six weeks and ultimately Judge Richard Leon found in favor of Time Warner and A T and T and said that the merger would be allowed to proceed, which it did. The Department of Justice appealed this decision, which sent the whole matter to the Court of Appeals, but by that time the merger had finalized, so A. T and T did officially own Time Warner. Um, I suppose this would be more about undoing a merger than preventing one from happening,

which would have been an enormous deal. Right if the government could come in and reverse a merger, that that would have been enormously huge. But A T and T was, you know, fighting that and ended up winning the appeal,

so it ended up not mattering. So A T. T was also looking to create its own digital advertising division, something akin to what we see with web based companies like Google and Facebook, and A T. T was also looking forward to the ability to play hardball with other cable TV providers by owning the means of production for

certain TV and film properties. That means that the A T and T could demand higher prices in carriage agreements with competing cable service providers that wanted access to that content.

The US government was making an argument that this process would likely result in higher costs to US consumers as these big cable companies started to fight against each other using their own content divisions as weapons, and the result would be that the consumer, you know, people like you and me, we would end up facing higher fees as

a result. But ultimately, as I said, A T and T won the appeal, and the court said that the Department of Justice just failed to meet the burden of proof that this merger would actually lead to that kind of thing, those higher fees for consumers, and the Department of Justice dropped the matter. In twenty nineteen, shortly after the acquisition completed, in A T and T renamed Time Warner again and thus gave us the name Warner Media. So if I do a quick rundown memory lane, we

had Warner Brothers or Warner Bros. If you want to be if you want to be silly about it, because it's B R O S with A with a period. But you had Warner Brothers. Then you had Warner Brothers seven Arts. Then you had Warner Brothers Incorporated when it was part of Kinney National Company. Then you had Warner Communications after Kinney had to split the entertainment division away from its other companies. Then you had Time Warner after the Time Incorporated merger. Then you had a O L

Time Warner. Then you had Time Warner again once they dropped a O L from the name, and now you have Warner Media under a T and T. We isn't this fun? While all that was being settled, Time Warner slash Warner Media purchased a ten percent steak in video streaming service Hulu for more than half a billion dollars. This really does show how the big media companies were

getting super concerned about streaming services like Netflix. We've seen several companies launched their own streaming efforts, but it's tough to go toe to toe with the really big players that are already established. So Netflix had had built up a really strong head start. Hulu launched as a cooperative effort between multiple studios, But then you've got Disney with

Disney Plus. HBO has tried a few different streaming services before it's settled on Hbo Max, NBC Universal has Peacock, Viacom, CBS has Paramount Plus previously known as CBS All Access, and so on. And that big, messy situation helps explain why A T and T, just a few years after having acquired Warner Media, is now looking to divest itself from that very same property. And it might seem weird

at a casual glance. I mean, here's an example of a really big telecommunications company spending around eight five billion dollars to acquire Time Warner. Then the company had to spend even more money because it gets pulled into a series of trials to fend off efforts from the US government to block that merger. Those legal battles stretched into

twenty nineteen. Then we get the global pandemic, which obviously had an enormous impact on various entertainment industries, and as we seem to be moving to the other side of the pandemic. Now we see that A. T and T wants to ditch Warner Media for a proposed forty six billion dollar deal in order for Warner Media to merge with Discovery. What A T and T discovered and didn't mean to right discovered rafter Discovery, but I did, was that it was going to have to fight battles on

multiple fronts in order to succeed as a business. It was going to have to dedicate assets to growing the telecommunications side of the business, and it was also going to have to dedicate resources to the entertainment the media side of the business and all Stimately, the company leaders decided that this was not really realistic. It they needed to be able to focus. So in order to do that and to focus on A. T and t s traditional core business, it would need to say goodbye to

Warner Media. Maybe part of that decision also came out of some of the controversial choices the company made during the pandemic, controversial at least within the entertainment industry. I should add, so with the pandemic, we had obviously lockdowns in various countries all over the world, and that meant that businesses like movie theaters were empty for most of movie production. Studios thus had some tough choices to make. For any film that was essentially in the can and

thus ready for distribution, what do you do? Do you sit on it for a year and hope that things get better than you just wait? Do you wait for various cities to start opening up and then aggressively market the film in those regions and make it available to those theaters. I mean, if some cities opened up much later than others, how does that affect your strategy? Does that mean you have to have a rolling movie premiere where it's going to launch in like five cities one week,

maybe three cities the following week. You know, that kind of rollout is tough to manage, and it all gets really really complicated. And you also just didn't know if people would go to the movies, right, Like, even with movie theaters open, people might be too concerned about their health to go and sit in a big room with a bunch of other people. So there was no guarantee that releasing a film in theaters would even be a

success in the first place. So back in twenty we just didn't know how long things were going to be really bad, and to be fair, even as I record this in early June, we still don't know how long things are going to be really bad. Things in the United States are opening up like crazy, but we don't yet know if that's a good thing. So A. T and D and Warner Media made the decision to make all of the theatrical releases out of Warner Brothers studios

available on the HBO Max streaming service. That decision caused some major waves in the entertainment industry. Of course, had the movie theater chains that were really upset with films available to watch at home, how are movie theaters going to convince people to come into a theater. Various filmmakers also got upset because they envisioned their work being experienced on a big screen, not in someone's little home theater

set up, at least not on its initial run. Other movie studios also got upset because now they also had these properties that were sitting on a shelf, and they felt the pressure to release them digitally so as not to lose ground to Warner Brothers. But they also didn't want to upset the same folks that Warner Brothers had. It is a very ugly situation in the industry for our consumers. On the other hand, I think it was

a pretty darn good deal. I mean, seeing a film on your television is always a different experience from going to the movies. But if it means that you can enjoy some entertainment and you're not risking yourself or others with regard to a deadly infectious disease, I think that's a pretty good option. And it did drive people to subscribe to HBO Max, which was something the company really needed.

They needed that win. With Disney and Netflix and other players like Amazon and Hulu already taking up a lot of mind share and a lot of home budgets in the streaming media space, what are media needed a hook to convince people to try out their own digital streaming service and making it the go to location for warners

One Releases was a big part of that. Now I haven't really covered Discovery, which, if you don't know, used to be my employer, And mean, that's another story, right, the story of how the division I work for and I heart Radio. That one started out as part of the How Stuff Works dot com and it changed hands a few times. Arguably, the story of the department I work in is a microcosm for the sorts of journeys

that we see with these really big media companies. Anyway, Discovery has its own suite of channels across different parts of the world, and recently the company revealed the name of what this new merged entity with time Warner will be or Warner Media will be, and it will be Warner Brothers Discovery. Okay, upon the merger, assuming that it goes through Discoveries CEO David Zaslov will head up the new media company, which is also interesting because Warner Media

is the larger entity of these two groups. Despite Discoveries global reach, Warner Media is just bigger, and yet it's Discovery CEO who will take charge. The motto for the company appears to be the stuff that dreams are made of, and The Verge points out that this is a line from The Maltese Falcon, which is a classic Warner Brothers film. However, I would like to point out that it really is in itself a reference to a much older line written

by William billy Bard Shakespeare. It comes from The Tempest. Prospero says the line, He's the old magician in the tempest, and he proclaims, we are such stuff as dreams are made on. So I think it's a Shakespearean reference. Ultimately, anyway, as it stands, the companies expect that this merger will

complete in mid twenty two. A majority stake in the new company will belong to a T and T shareholders, who will keep a little bit more than sev ownership of this new media company presumably will also see these two companies attempt to combine forces to create a more unified and powerful streaming service. Both of them individually operate those kinds of services. You've got HBO Max on the Warner side and you've got Discovery Plus on the Discovery side.

There's no telling yet if those two are going to combine into a single service. Uh. If it does, it wouldn't surprise me. If I had to guess, I would say that the HBO Max name would stick around. I think it might have slightly better name recognition, But we'll have to wait and see. And of course that does assume that the merger actually does go through. This has been one of the most convoluted, complicated histories I've ever

had to trace. The the ownership of the various Warner properties has changed so frequently in so many different ways, sometimes in spectacular fashion, sometimes in a very sad way. Obviously, one of the big issues with all the major media companies is that most of them don't actually own all

of their content anymore. With the exception of companies like Disney, most of them, at some point or another have sold off parts of their libraries, usually in an effort to take care of some debt that the companies had accrued. And that means that, you know, if you look at MGM, which Amazon is trying to acquire, you realize, oh, that deal doesn't include The Wizard of Oz. That movie is not part Even though the Wizard of Oz was an

MGM movie, that doesn't belong to MGM anymore. Instead, that belongs to Warner Media because Ted Turner bought the rights to all those old MGM films and that ended up being part of the Time Warner deal, which thus eventually evolved into Warner Media. So yeah, very complicated stuff, but really important. Um also really important just to keep an eye on where the landscape of modern media is, like, how is shaping up and what it means for us. UM.

I think competition is always a good thing. So in some ways it's good to see lots of competing streaming services, but in other ways it's very frustrating, right because you probably don't want the burden of having to subscribe to all of them, right, But it may be that each one of them has a few pieces of content you really want and there's no other way to get them, so that remains kind of a difficult situation for the consumer.

On the flip side, if some entity, and let's be honest, if Disney were to ever really completely monopolize the industry, that wouldn't be good for us either. We need to have those different perspectives and those different outlets in order for good stories to continue to be told. But that wraps up our epic, long and winding road to follow the history of Warner Brothers. I hope you enjoyed those episodes.

The other two episodes, as I said, published last week, so if you missed out and you're thinking, well, sure, we'd be good to know where they started, you can go back and listen to those. If you have suggestions for topics I should cover in future episodes of tech Stuff, reach out to me on Twitter. The handle is text stuff h s W. That's a hold over from the old house stuff works days that hs W. But you know what, that's the Twitter handle and I haven't tried

to change it. I'm pretty sure someone else already has just tech stuff, so I can't do that anyway. Send me a message that way, whether it's a topic I should cover, or maybe you have some questions or suggestions for things, let me know and I'll talk to you again really soon. Text Stuff is an I Heart Radio production. For more podcasts from I Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows.