AT&T Falls as Traders Digest Deal, Smaller Dividend Payout
(Bloomberg) — For months, Wall Avenue has known as on AT&T Inc. to shed its media belongings, together with CNN, arguing that buyers choose corporations with a singular focus.On Monday, AT&T lastly relented, saying that CNN and its company siblings shall be becoming a member of forces with Discovery Inc., dwelling of networks like HGTV, Meals Community and TLC.For CNN, the deal might present various strategic benefits — and avoids the complications of a possible mixture with Comcast Corp.’s MSNBC. David Zaslav, the present head of Discovery who will lead the brand new mixed firm, mentioned Discovery’s international enterprise will assist “supercharge” CNN’s enterprise outdoors the united statesWhile AT&T has targeted largely on wi-fi service within the U.S. market, Discovery has expanded aggressively abroad. It has a presence in key European markets, which may gain advantage CNN’s worldwide bureaus. Discovery owns TVN, a broadcast channel in Poland, and has a stake in GB Information, a brand new information channel in Britain run by Andrew Neil, a former govt in Rupert Murdoch’s media empire.“Not solely does David supply a hands-on media experience that AT&T couldn’t supply, however he’s received a world outlook that completely matches CNN,” mentioned Jon Klein, the previous president of CNN’s U.S. operations.AT&T shares had been down 5.8% to $29.55 at 3:09 p.m. Tuesday in New York, with Discovery shares off 0.3% to $33.76.Awkward SituationsThe deal may also free CNN of a company dad or mum whose political contributions at instances thrust the newsroom into awkward conditions. In 2018, as an illustration, CNN needed to cowl how AT&T paid President Donald Trump’s private lawyer Michael Cohen whereas searching for authorities approval to purchase CNN’s dad or mum firm, Time Warner.The deal can also put to relaxation hypothesis that CNN is on the market. Earlier than Monday’s announcement, CNN had obtained curiosity from potential consumers, based on the Wall Avenue Journal. However Zaslav shot down the concept Monday, telling CNN “we’re not keen on promoting it, and we’re going to spend money on it.”In an interview with Bloomberg Information, Zaslav cited his expertise at NBCUniversal, the place he launched the cable information channels CNBC and MSNBC.“I’ve seen the worth of these belongings,” Zaslav mentioned. “It’s extraordinarily highly effective. And in a world the place there’s a lot content material, stay information and stay sports activities turns into an actual palpable forex.”For CNN’s 3,000 workers, the shocking improvement might present a measure of reduction. Previous to the announcement, some observers believed that Comcast’s NBCUniversal was the almost certainly merger associate for AT&T’s media belongings. Such a pairing would have put CNN underneath the identical roof as its cable-news rivals at Comcast’s MSNBC, the kind of pressured union that usually ends in ugly energy struggles and painful layoffs.Dealing with ChallengesRegardless of its proprietor, CNN nonetheless faces challenges. The information community must discover a option to preserve scores from additional eroding in the course of the Biden years. CNN’s viewers in the important thing demographic of 25-to-54-year-olds declined 52% in April from a 12 months earlier, a steeper loss than at MSNBC or Fox Corp.’s Fox Information. It doesn’t but have a streaming vacation spot for cable cord-cutters. And in February, CNN’s chief, Jeff Zucker, who’s well-liked internally, mentioned he deliberate to step down when his contract expires on the finish of the 12 months, having efficiently led the community by the 4 tumultuous years of Trump’s presidency.Zaslav, 61, is mates with Zucker, 56. The 2 play golf collectively.Zaslav shall be sticking round awhile. On Tuesday, Discovery prolonged his employment contract by 2027. Requested on Monday whether or not he’d attempt to persuade Zucker, who has been president of CNN since 2013, to increase his time on the community, Zaslav was obscure.“Jeff is super-talented,” he mentioned. “He has to determine what he desires to do.” Zaslav advised CNN he’s “hoping there shall be a chance for Jeff to stick with us.”Zucker didn’t reply to a request for remark.Zaslav mentioned CNN and Discovery might work collectively on documentaries and share a few of that sort of content material. CNN has lengthy made docuseries just like the journey and meals present “Anthony Bourdain: Elements Unknown.” Just lately, CNN has generated loads of buzz with “Stanley Tucci: Looking for Italy,” a journey sequence through which the actor roams across the nation, exploring regional cuisines.Such evergreen, nonfiction programming, at which Discovery excels, might help retain viewers in the course of the inevitable lulls within the information cycle.“There’s an actual alternative with their documentary library,” Zaslav mentioned. “That’s our candy spot.”(Updates with Zaslav contract renewal in 14th paragraph.)Extra tales like this can be found on bloomberg.comSubscribe now to remain forward with essentially the most trusted enterprise information supply.©2021 Bloomberg L.P.
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