KEY POINTS

  • The video game business of Warner Bros. is too valuable to be placed on sale now says AT&T Inc.
  • Warner Bros. Interactive Entertainment was reportedly attracting interest from Microsoft, Take-Two Interactive, Electronic Arts, and Blizzard
  • Aside from being a more complicated deal than initially thought, a video game release could be like a blockbuster film premiere, hence AT&T changing its mind

Deciding it was too valuable to unload during its effort to streamline, AT&T Inc. has removed Warner Bros. Interactive Entertainment from its list of non-core assets up for sale.

Warner Bros. Interactive Entertainment is the company behind “Harry Potter: Wizards Unite,” “Mortal Kombat 11,” and the “Arkham” series of games starring Batman. It has apparently attracted interest from several major companies and could have reaped $4 billion, as reported by CNBC in June.

AT&T, however, balked because of the business’ growth potential, Bloomberg reports. AT&T began working with LionTree Advisors earlier this year to explore a potential sale of the business. Microsoft Corp., Take-Two Interactive Software Inc., Electronic Arts Inc. and Activision Blizzard Inc. were among potential suitors for the asset according to people familiar with the matter.

This decision comes in the middle of turnover in AT&T senior leadership this past July. Chief Operating Officer John Stankey took over as chief executive officer after Randall Stephenson left that role, remaining chairman.

With the upcoming release of a potentially popular “Harry Potter” video game that would allow players to take on roles as different franchise characters and explore Hogwarts, this is but one of several factors why AT&T is canceling the sale.

The COVID-19 pandemic has already wreaked havoc on the cinema business, forcing people to seek out new sources of entertainment, and video game releases are almost like premiering a blockbuster movie.

There is also the possibility that AT& realized how much more complicated it would be to sell the business than they initially expected. With all of the licensed content in the games, a set of long-term strings were likely attached to each property.

Dallas-based phone giant AT&T bought Warner Bros. Interactive Entertainment as part of its $85 billion acquisition of Time Warner Inc. in 2018. An earlier purchase of DirecTV on top of this acquisition subsequently increased AT&T’s debt, leaving the company looking for ways to unload assets and cut costs.

Under Stankey’s control, businesses have been reported to be taking bids, including the declining satellite-TV service DirecTV; digital-advertising unit Xandr; and anime streaming service Crunchyroll. In October, Stankey told investors, “We have no sacred cows -- we’re always open to making portfolio moves.”

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