AT&T No Longer Selling Gaming Unit Warner Bros. Interactive Entertainment
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.
AT&T no longer looking to sell its Warner Bros. Gaming unit according to a report from Bloomberg.
— Daniel Ahmad (@ZhugeEX) September 1, 2020
Consider the unit too valuable to sell. https://t.co/88wKlrDhju pic.twitter.com/R3jyZtzfSi
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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