As part of a company-wide restructuring effort, several hundred jobs are being eliminated across AT&T's WarnerMedia division, which includes HBO, Warner Bros., and Turner Broadcasting. HBO is expected to lay off 150 to 175 staffers in these layoffs, and Warner Brothers could fire as many as 650.
The layoffs come in the wake of the release of AT&T's Q2 financial report, which listed substantial losses in revenue for all WarnerMedia companies. HBO, Warner Bros., and Turner have all taken a hit to their bottom line this year due to knock-on effects from the COVID-19 pandemic, such as closed movie theaters, halted productions, lost advertising revenue, and canceled sporting events. HBO also suffered a big spike in its operational expenses due to the launch of its streaming service HBO Max in May.
There are varying reports about the precise numbers of jobs lost to the layoffs. Variety lists 650 layoffs at Warner Brothers and 150 to 175 at HBO, but Ars Technica claims the total number of eliminated positions across all affected companies is only around 600. However the numbers shake out, this is the latest in a series of layoffs by AT&T, which has cut over 41,000 jobs across all of its departments over the course of the last three years.
AT&T was over $153 billion in debt at the end of 2019, following its acquisition of DirecTV in 2015 for $67 billion and its controversial merger with Time Warner in 2018. The gamble on AT&T's part seemed to be to buy as much as possible in order to preemptively dominate the streaming market, then use the money from that dominance to pay off the resulting debt. It was a big, risky move that was already backfiring on the company before the pandemic hit; AT&T reported a loss of 4.1 million subscribers to its services at the end of 2019, much of it due to price hikes resulting from its debt load. As a result, it's been in a selling and cost-cutting frenzy for much of the last two years. 2020 was always going to be a rough year for all the companies under the AT&T umbrella, but COVID-19 has accelerated the dive.
AT&T, and thus WarnerMedia, appears to be in trouble, but it's still too soon to start talking about what happens if they go under. While AT&T's attempts to sell off Warner's games division seem to have stopped for now, the company's seeming desperation to make money is likely to lead to some more shortsighted decisions in the near future. It's anyone's guess what AT&T might do next, but anyone who happens to own a more comfortably situated multimedia company should probably take a look at AT&T's portfolio and see what they might like to own for themselves. If AT&T continues along this trajectory, it's likely to start selling off parts of its would-be empire for pennies on the dollar.
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Source: Variety