WarnerMedia executives are heartbroken as they imagine the Disney deal that could have been

  • WarnerMedia insiders are wringing their hands upon learning their company could have been sold to Disney.
  • They’re frustrated their AT&T shares have gone nowhere while Disney’s have soared.
  • It was Time Warner’s second ill-fated deal after AOL’s, dubbed the worst merger in history.
  • See more stories on Insider’s business page.

WarnerMedia executives are wringing their hands about what might have been now that news has emerged that their company might have been bought by Disney. 

Executives learned this week through The New York Times that Disney approached their company back in 2016 before AT&T made a deal and are wondering about what could have been if then-Time Warner chief executive Jeff Bewkes made a different call. WarnerMedia is poised to change hands again, after AT&T announced a deal to spin off WarnerMedia and merge it with Discovery.

When WarnerMedia executives sold to AT&T in 2018, their company stock converted to AT&T shares. Those shares are worth less today ($29.52) than they were on the day the deal was consummated ($32.60), while Disney shares recently have doubled in value on its growth in streaming subscribers.

“It was a disaster,” one person familiar with the history said. “It is a horribly performing stock. It is a deep disappointment the way it worked out.” This person believes Disney would have handled the creative community and had a better streaming strategy for HBO Max than AT&T, too.

The person familiar with the history said Bewkes told Iger he was interested in listening and to call him back in a few weeks. But by that point in 2016, the pact with AT&T was almost complete and Bewkes and AT&T’s then-CEO Randall Stephenson were about to embark on a roadshow to sell the deal to investors. 

Behind the scenes, Stephenson barely involved any of the Time Warner team in the integration planning, and within a year, nine of its top executives had departed, according to this person.

At the time, the conventional wisdom was that Hillary Clinton would win the Presidential election and that a merger of two content companies would be harder to do under a Democratic Administration than a merger of a distributor and a content company. In the end, President Trump’s Justice Department blocked the deal anyway, with Trump expressing animus against Time Warner’s CNN.

For some senior members of the company, it’s the second time a major merger has left them out of pocket. An earlier deal with Steve Case’s AOL, dubbed the worst merger in history, also left employees with shares that were worth less after the deal. 

Before Disney and AT&T came calling, Time Warner also got a $80 billion bid from Fox in 2014, which it rejected in part because it was a mix of cash and stock and Time Warner pushed back on the offer as too low.

One WarnerMedia exec told Insider, “As dreadful as we thought it was when Rupert [Murdoch] was going to buy the company, it actually seems like that might not have been as disastrous in hindsight as AT&T was.” Another former employee was more charitable, saying, “I would say the stock of Disney has done a lot better than the stock of AT&T, but they would have eviscerated the jobs to the same extent, or more.”

Mario Gabelli, a longtime media investor and author of “Merger Masters: Tales of Arbitrage,” came to Bewkes’ defense, saying that in any deal, one party will always do better than the other. “I don’t want to do revisionist history. I don’t believe certain statues should be taken down. Jeff Bewkes is one of those statues.” 

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