A WarnerMedia sale is not likely to happen before Q4 2021.
A WarnerMedia sale is likely to occur, but not before calendar Q4 2021. The WarnerMedia business unit is a significant drag on AT&T’s (tkr: T) ability to invest in its core, capital intensive, distribution/data/fiber business. Disney (tkr: DIS) is the natural buyer. Apple (tkr: AAPL) and Netflix (tkr: NFLX) have yet to demonstrate a penchant for large acquisitions. Such a deal would mark Disney Executive Chairman Bob Iger’s swan song.
A sale is not imminent. WarnerMedia’s new content rollout strategy eliminates the traditional content windowing release schedule. Thus, WarnerMedia’s operations are too fluid for would-be-buyers to confidently assess forward revenues and EBITDA. This uncertainty means that prospective WarnerMedia acquisition bids would likely carry valuation haircuts too steep for AT&T to stomach. Two or three quarters of history under WarnerMedia’s new content delivery model would likely bolster its valuation. Four or more quarters would be even better.
See the video interview with WarnerMedia Studios & Networks CEO Ann Sarnoff at the end of the article.