AT&T Might be on Track Again

AT&T is not just an old Company, it's one of the Oldest Holdings in my Portfolio. I've been more than happy with the Investment for both Trading and Dividend Income. The accumulation of Equities (Inventory) over time offers the greatest amount of leverage for Trading. It is the number of Shares that allows us to realize a lot of profit from the small moves of a, "Beta Stock," like AT&T.

AT&T Transition Back to Basics

You probably know AT&T as one of the biggest phone companies in the world, right? Well, they also owned a bunch of media stuff, like Warner Brothers, HBO, CNN and more. They bought them a few years ago for a whopping $85 billion. That’s a lot of money, even for AT&T. But guess what? They just decided to sell them off and merge them with another media company called Discovery. Discovery makes shows like Shark Week, Deadliest Catch and 90 Day Fiancé. The new company will be called Warner Bros. Discovery, and it will have a lot of movies and shows to stream online.

Why did AT&T do that? Well, they said they wanted to focus on their main business of wireless and broadband services, where they have to compete with other phone companies like Verizon and T-Mobile. They also said they wanted to pay off some of their huge debt, which was over $150 billion at the end of 2020. By selling their media stuff, they expected to lower their debt by about $40 billion by the end of 2023. Plus, they said they wanted to invest more in their 5G and fiber networks, which are supposed to be faster and better.

But not everyone thought this was a good idea. Some people thought AT&T was giving up on their dream of creating a big media empire that could use their phone network and customers. By selling their media stuff, they basically admitted that they made a mistake and paid too much for them. It was the ideology of two different CEO's. Randal Stephenson to the current CEO (Slash Saviour) John Stanky.

Some Owners/Shareholders also think AT&T was losing a valuable source of income and growth by selling their media stuff, which was one of their most profitable and fastest-growing parts of their business. In fact, AT&T had to cut their dividend by almost half, from $2.08 per share to $1.11 per share, because of the losing deal.

And what about the new company, Warner Bros. Discovery? Will it be able to compete with other streaming giants like Netflix, Disney and Amazon? Well, that’s not so clear either. While Warner Bros. Discovery will have some strong brands and franchises like Harry Potter, DC Comics, Game of Thrones and Friends, Discovery will have a niche appeal with its reality shows and documentaries. The new company will have to deal with not only Netflix, Disney and Amazon, but also other players like NBCUniversal’s Peacock, ViacomCBS’s Paramount+ and Apple TV+.

Shares of AT&T are Rising, this Morning.

In Pre-Market Trading, Shares of AT&T are up 4.82%. They reported earnings this morning and there is an increase in Free Cash Flow, Subscribers, and (Obviously) Revenue. I suspect either Share Buy Backs or an Increase in the Dividend. I will be watching AT&T closely today and listening to their Conference Call. I suspect the Potential of a Downside Trade (Sell then Buy lower), after this excitement calms.

Works Cited:

: [AT&T and Discovery Close WarnerMedia Transaction]: [AT&T to spin off WarnerMedia in $43 billion Discovery media merger]: [AT&T seeks sale for Warner gaming unit]: [The shareholder debacle behind AT&T’s plan to combine WarnerMedia with Discovery]

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