Responding to response -your intake

I chose the Wall Street Journal article from May 2021 addressing the divestiture and refocusing of AT&T of its media empire. AT&T bought DirectTV in 2015 and in 2018 bought Time Warner for $80 billion (WSJ.com. 1). This strategy was miscalculated and was unsuccessful, costing the company more than $100 billion in lost cash and market value. At the Beginning of 2018 AT&T (T) had a market value of $270.5 billion, today AT&Ts market value is $198.8 billion, a loss of $72 billion (tradingeconomics.com. 2).

Not only did AT&T make an $80 billion acquisition, its enterprise value also decreased significantly. Now they are working on a spinoff in a deal with Discovery entertainment to divest their media holding including HBO, CNN, TNT, Time Warner, TBS, and Warner Bros (1).

The company missed the warning signs by miscalculating its ability to compete against Amazon and Netflix in the streaming area. ATT&T also overestimated their ability to successfully execute the strategy they had undertaken to enter into an area that was not their expertise. McGrath Empire Building Trap best describes what happened in this scenario. In the end, thousands of employees left or were laid off as a result of the failed strategy (1).

To avoid falling into the company trap of Empire Building, AT&T could have developed their own media outlets encouraging experimentation, iterative learning, and risk-taking, thus empowering employees (1) to seek a new growth area instead of trying to force a square peg into a round hole.

As this new strategy emerges from AT&T and the new collaboration with Discovery media, a new company will emerge where AT&T shareholders will own 70%.