AT&T to scrap sale of Warner Bros. video-game unit
AT&T Inc. has removed its Warner Bros. video-game business from the list of noncore assets up for sale, deciding it was too valuable to unload during its effort to pay down debt and streamline, according to people familiar with the situation.
Warner Bros. Interactive Entertainment, the gaming unit that is home to titles like Harry Potter: Wizards Unite and Mortal Kombat 11, had attracted interest from several major companies and could have reaped $4 billion, as reported by CNBC in June. But AT&T balked given the business’s growth potential, said the people, asking not to be identified because the information is private.
AT&T began working with LionTree Advisors earlier this year to explore a potential sale of the business, according to two of the people familiar with the matter. Microsoft Corp., Take-Two Interactive Software Inc., Electronic Arts Inc. and Activision Blizzard Inc. were among potential suitors for the asset, those people said. AT&T and Take-Two declined to comment; the other companies didn’t immediately respond to requests for comment.
The decision to abandon the sale, which could be subject to change, came amid a turnover in senior leadership at AT&T. In July, Chief Operating Officer John Stankey took over as chief executive officer after Randall Stephenson left that role, remaining chairman.
A few factors may have influenced AT&T’s retreat from the sale process. Among them is the upcoming release of a potentially popular Harry Potter game that allows players to take on roles as different characters and explore the Hogwarts wizard academy. And as the Covid-19 pandemic has closed megaplexes, people are seeking out different sources of entertainment. New video-game releases are landing like blockbuster movies.
It’s also possible that AT&T realised that selling the business could be more complicated than it expected, as analysts have pointed out. The amount of licensed content in the games would come with a set of long-term strings attached.
The Dallas-based phone giant acquired the video-game maker in its $85 billion purchase of Time Warner Inc. in 2018. That deal, and an earlier acquisition of DirecTV, ballooned AT&T’s debt and the company has been looking to ways to cut costs and unload assets.
Under Stankey’s control, businesses have been reported to be taking bids, including DirecTV, the declining satellite-TV service; Xandr, the digital-advertising unit; and Crunchyroll, the anime streaming service.
Stankey told investors in October, “We have no sacred cows -- we’re always open to making portfolio moves.”
By Nabila Ahmed and Scott Moritz