After 50,000 Layoffs And Absolute Chaos, AT&T Ends Its Bungled Media Experiment

from the great-job,-Bob dept

You might recall that AT&T spent nearly $200 billion to acquire Time Warner and DirecTV, believing this would turn the dodgy old phone company into an innovative new media juggernaut. But despite $42 billion in tax breaks and oodles of regulatory favors from the Trump administration (like killing net neutrality), AT&T simply couldn't overcome its own nature as a bumbling, government-pampered telecom monopoly. As a result, the company has laid off more than 52,848 employees since 2017.

The company has also lost more than 8 million TV subscribers since 2017; users who largely fled due to price hikes imposed to help recoup AT&T's massive merger debt. AT&T also made numerous enemies along the way by reshuffling and shitcanning numerous top executives, gutting numerous brands that were popular with consumers (Mad Magazine, DC's Vertigo imprint), and generally behaving like a cocky bully in a high school cafeteria despite having clearly no idea what it was actually doing.

After a micro-investor revolt about growing merger debt, AT&T's now backing out of the media business about as quickly as it came in. After nobody wanted to buy an increasingly useless satellite TV operator, AT&T spun off DirecTV back in March with a value of nearly a quarter of what AT&T paid for it. Now AT&T is also attempting to spin off its media assets in a new combination deal with Discovery that would result in AT&T effectively exiting the media business entirely. Under the deal AT&T gets a little merger debt relief, and the entire operation is spun off into an entirely new entity tasked with competing in the streaming wars with Netflix, Comcast NBC Universal, and Disney.

AT&T's media effort will go down in history as one of the most bungled face plants. But coverage from AT&T-owned CNN mentions absolutely no part of AT&T's hubris or repeated failures. Not a single error or layoff is cited as the AT&T-owned company attempts to explain to readers why AT&T is tucking its tail between its legs and running for the exits:

"On Monday morning AT&T (T) and Discovery, Inc. (DISCA)announced a deal under which AT&T's WarnerMedia will be spun off and combined with Discovery in a new standalone media company. The deal, subject to regulatory approval, will combine two treasure troves of content, including the HBO Max and discovery+ streaming services. CNN will be included in the transaction."

Writing a 1,000 word story on AT&T's media ambitions without citing a single strategic error takes some real skill.

Other outlets, like Variety, did a much better job capturing the absolute chaos going on inside AT&T's acquired properties as employees are jerked from one bad decision to another, and now prepare for yet another wave of massive restructuring (and likely more layoffs):

"There’s no way this deal doesn’t make AT&T look like fools,” said a WarnerMedia veteran.

“People are in shock,” said a longtime WarnerMedia insider. Department heads lamented the promise that the coming days would involve the laborious process of trying to reassure executives at a time when the future is anything but clear.

"Here we go again,” one executive said.

AT&T executives genuinely thought they could buy, merge, bully, and bribe their way to media and online advertising dominance. But as government-pampered natural monopolies, US telecom giants genuinely find competition and innovation to be alien constructs. So every time they attempt to wander outside of their core competencies (building and running networks, lobbying to limit broadband competition), the end result is... embarrassing. Just ask Verizon's Go90/AOL/Yahoo venture. Or Verizon's VCAST-branded app stores and video services. Or AT&T/Verizon/T-Mobile's doomed "ISIS" branded mobile payment platform.

Irony being that the money spent on these megadeals, and the endless lobbying required to ensure they survive, is being thrown around at the same time many of these companies are skimping on broadband infrastructure investments. The money spent on AT&T's media ambitions alone could have funded fiber to every home in America. Instead we got tens of thousands of layoffs, no shortage of empty promises about amazing "synergies", and the death of Mad Magazine.

Granted there's plenty of blame to go around for the massive financial, market, and human costs of these repeated, expensive face plants. Including a media that adores parroting pre-merger hype, and rarely follows up after the fact to confirm whether those promises are true (sorry, that's just not profitable). As well as US regulators and antitrust enforcers that, merger after merger, simply refuse to do their jobs. Collectively this results in a broader culture where we make the same mistakes time and time again, markets and employees suffer, yet we refuse to learn much of anything whatsoever from the experience.

Filed Under: ads, dumb pipes, media, mergers, streaming, tv
Companies: at&t, directv, discovery, time warner

Embedded Wireless: A Step Towards Dumb Pipes?

from the open,-but-not-that-open dept

At a FierceWireless panel during the CES show today, panelists from Verizon, AT&T and T-Mobile discussed the progress the embedded sector has seen over the past year and is expected to show in 2010. Embedded wireless, from a consumer electronics perspective, means factory installing a cellular radio into a (non-phone) device. The devices range from the obvious Netbooks and Kindles, to the less obvious cameras and media players, and more. The panelists were keen to point out that in the past year, the pieces of the puzzle all fell into place -- what had been lacking was affordable embedded modules, strong data networks, and flexible enough rate plans that didn't try to capture $60 a month from every device. I would agree that the carriers have finally become eager to consider a range of pricing models, all in the past year. From ad hoc daily netbook connection fees, to the integrated pricing seen on the Kindle, the Nook, and Garmin Nav devices, we're finally seeing some flexibility in the way carriers charge for data access. It's about time, too: for too long mobile data followed the $80 Rule, where the only way to get cellular data was an $80/mo lengthy contract.

As an example of the changes from just the last year, Verizon Wireless previously offered just a $60/mo contract for laptop connectivity, where now they sell a prepaid day pass, a week pass, and different tiers of subscription plans. That's good progress, but market forces are going to demand a wider range of solutions, and at more reasonable discounts for lower tiers. For example, how long will the market support Verizon's 5GB/mo subscription at $60 and their 250MB plan at $40? The lower plan is 5% of the throughput at 66% of the price! Clearly, there is room for these prices to move a little more.

An interesting point raised by Sue Marek of FierceWireless was whether embedded connectivity deals like that on the Kindle relegate the carrier to dumb pipe status. After all, when a great embedded wireless user experience is created, the carrier becomes invisible. Good question, but I think the answer is no. The carrier becomes a white label partner, but not a dumb pipe. That's because, so far, most of these deals have involved cooperation between the CE vendor and the telecom operator, in order to make the activation seamless and simple for the user. The carrier has been integral to the development, activation, and service management. That trend is likely to continue for the reason I explain in the following paragraph.

Consumer Electronics makers, like Garmin, could just put a GSM radio in their devices and say "connect to your choice of service provider by inserting your SIM". However, the cellular module costs are hovering just under $100, and that's a big nugget to add to the Bill of Materials on any CE product. And the CE makers know that they have leverage, since they have the ability to steer their customers onto a specific wireless carrier, and that any carrier will be attracted to a block of new subscribers. Guess what happens... that old, familiar word, subsidy. If Garmin chooses to partner with a specific carrier, the carrier will pay for the opportunity and in effect subsidize the device's radio. This brings down the cost, and the MSRP of the product, which in turn helps Garmin and the consumer. For this reason, until the radio modules are very cheap (like Wi-Fi modules are), we will generally see embedded wireless tied to a specific carrier.

Filed Under: dumb pipes, embedded wireless, wireless

Why Are ISPs Trying To Sell Cars And Homes?

from the diversification? dept

We all know that various broadband ISPs are trying to get away from being "just dumb pipes," by providing "value added services" that most people ignore, such as customizable home pages and email, but we had no idea that broadband providers like Time Warner and Cox are both pushing their own car selling websites as well. Plus, it appears that Cablevision is doing something similar with home sales. It seems likely that all of these companies are merely putting their brand on someone else's car lead generation service, but it really does seem like an odd service for these ISPs to be offering. While broadband providers eventually are going to have to get comfortable with the whole notion of being a dumb pipe, you'd still think that if they want to offer additional value added services, they'd at least work on things that actually were somewhat related to the broadband they were providing.

Filed Under: cars, dumb pipes, isps
Companies: cox, roadrunner, time warner cable

Service Providers Can't Be Honest With Themselves, So How Can They Be Honest With You?

from the self-realization-time dept

Last week I was wondering why the various mobile operators couldn't just be honest to customers in explaining the limitations of various service plans. A report had come out saying that people were sick and tired of service providers lying about service and features -- and it seemed to me that a company that was honest would get a lot of customers as a result of that honesty. Of course, this also came only a few days after we were wondering why Comcast couldn't come out and give an honest explanation for why it was jamming certain types of packets. Blogger Tom Lee from the Manifest Density blog, has responded to both things (though, incorrectly refers to Techdirt as being anti-telco, which we're not at all -- we're anti-telco-stupidity, which is quite different), making a very perceptive point. He basically says that it's impossible for any of these service providers to be honest with customers because doing so would require them to first admit the truth to themselves: they're just commodity dumb pipe providers, and all their efforts at pretending to be something more are pretty much meaningless. Until they can admit that (and Lee's assertion is they won't admit that), they can't be honest with customers. There's definitely a large chunk of truth in there, and it explains part of what the problem is -- but I still don't think that precludes service providers from being a lot more honest, even as they try to provide additional value-added services that might not matter. Being honest and transparent with customers is a good marketing idea for these companies, especially as they're being challenged to be anything more than a commodity dumb pipe provider. Being honest can actually be a part of their differentiated appeal to customers.

Filed Under: commodities, dumb pipes, service providers
Companies: at&t, comcast, sprint, verizon wireless