Phone Dieu! An AT&T Activist Strikes!

You can’t just have a bunch of companies throwing around tens of billions of dollars like confetti on New Year’s Eve without sooner or later someone asking: What in the hell is going on around here?

Thus far, no one has produced a convincing explanation of how all this adds up to a profitable business; let alone has anyone turned it into a profitable business. There used to be talk about—well, then you can charge $50 a month. But here in the semi-finals, that’s kind of out the window.

AT&T of late has been moving in strong to claim a seat at the table, basically, it seems, adopting the Netflix DSE model and making it its own. First, there was the $250,000,000 to $1,000,000,000 deal with the immortal J.J. Then they took a page out of the Amazon playbook plunking down $20 mil in Toronto for Bad Education . . . to show on HBO Supermax? Then this week, another $600,000,000 for Big Bang Theory, but that’s sorta mostly in the family . . . .

All that DSE spending has perhaps awakened some on Wall Street to remember the massive table stakes AT&T had to pay to get in this race off the cliff—$104 billion, including debt, for Time Warner, and that was after its original $67.1 billion ante, when it bought DirecTV, did not get it in the game to own the future of entertainment as expected. What's $20 million on a film no one will watch when you're about $200 billion in already? That $200 billion was not for Netflix, Spotify, and Snap but for aging assets whose best days were around the same time as most of the series currently having their nostalgic turn in the spotlight.

So far, as the Semis have unfolded, all Wall Street has been able to do is gape in awe at these big deals and celebrate their immensity by raining more money on their heads. We’ve wondered when some the big investors would start to step forward and ask, you're spending billions for what? And why do you say we need to do that?

Along comes Elliott Management, holding a mere $3.2 billion stake in AT&T, barely enough to put a sitcom episode on the air, but still, enough that the people they’ve invested their money with are obliged to pretend to take notice. Suddenly, completely impertinently, the Elliott folks are asking why having invested in a telephone company, that telephone company feels obliged to buy one-fifth of Hollywood.

Elliott, according to its letter, also is demanding that Stephenson "articulate a clear strategic rationale for why AT&T needs to own Time Warner." Elliott even quotes former Time Warner CEO Jeff Bewkes, who recently called the vertical integration of content and distribution a "fairly suspect premise."


A clear rationale!? The temerity! 

You’ve got the wires, so you’ve got to keep people on them . . . so you need . . . stuff! And if you own the service, you can control the pricing. Well, maybe not quite yet. But someday. Anyway, since you’ve got the service, it’s better you make your own shows, otherwise, you’ll have to go out and pay half a billion dollars to license a sitcom! Well, um, anyway . . . . 

The entire industry is speeding down this path that you’ve got to own the wires and the service and be producing everything for your own service into one giant integrated phalanx that you’ll march off to do . . . something? For the sake of this, Hollywood is supposed to be ready to throw everything else out the window.

So now you have Elliott saying, excuse me and asking the kinda obvious question of why. 

Perhaps Elliott’s biggest “why?“ pertains to the Telephonies’ Man in Hollywood, the person who's been charged with managing its great leap to showbiz. WSJ writes:

This month, Mr. Stephenson elevated his longtime lieutenant John Stankey to become chief operating officer a move that sparked Elliott’s decision to go public with its grievances about AT&T’s yearslong empire-building strategy. Mr. Stankey was put in charge of DirecTV after AT&T acquired it and later moved to head up WarnerMedia, the renamed Time Warner unit inside AT&T. He is widely viewed as the heir apparent for the CEO job. But Elliott viewed his recent promotion to COO as hasty, people familiar with the matter have said.


The man has come to Hollywood, mashed a bunch of separate, unrelated divisions together under one PowerPoint and a half-baked name, pushed out all his division heads (including one in which he had expressed a ringing vote of confidence not days before, notwithstanding the fact that the issues that would lead to his downfall were known all the way across the country to the whiteboards of Elliott Management), created a new flow-chart of overlapping and unclear responsibilities and priorities, thrown Netflix-like money after some mega-deals . . . . 

Yet even after all that, the little minds at Elliott Management are not at all impressed and don’t think he deserves to be head of one of the largest corporations on earth. What do you have to do to convince some people?  

Don’t get me wrong. As confused as the Warner Media umbrella may be on the outside, under it there’s plenty of top-drawer assets and talented people. The plan might be confused but in the end, talent beats the plan anyway, so everything could work out just fine.

The problem for many is now with Elliott’s example, suddenly every company on the field is going to have to look over their shoulders, wondering if they’ll be forced to explain, Now what exactly is the theory behind what you call your, I think you call it your, Drunken Sailor Era?

Since time immemorial, invaders have landed on our shores with all sorts of fantastic stories about why it was necessary for them to be here: from oil companies, to aircraft builders to liquor and barons to electronics makers—the seamless flow between their products and what Hollywood does was going to create conglomerates like the world had never known.

In the end, after they wrote off their astronomical losses and slunk out of town like the guy pushed into the pool at the wedding party, it was always clear, there’s one great reason to buy into Hollywood that keeps them all coming: because it’s a lot more fun to buy into Hollywood than it is anywhere else. 

Unfortunately, as the man said, that fun is gonna cost you. If you’re AT&T, it’s time to come up for a pretty good explanation for that mountain of receipts you’ve brought home.

The thing about activist investors is they don't go away quietly. They don't hear AT&T CEO Randall Stephenson trying to placate them and then slink away, apologizing for having bothered them in the first place. At best, they're a distraction, and perhaps a spin-off or a stock buyback satisfies their thirst. But in the meantime you're losing valuable time. More often, though, activists get what they want—starting with the heads of the people they feel made a particular stock undervalued. On the other side of the activist experience, the company may be leaner, and it may have had the impulse beaten out of them to play games that only CEOs with a hammerlock on voting control get to enjoy. But what they definitely are not are bold shapers of the future. AT&T's old-school DSE bought them a very pricey ticket to the semifinals. Now Elliott may be pushing it to the parking lot before the traffic gets too bad. 

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The Ankler Grows: A Reader Update

Interrupting your regularly scheduled day with a little Ankler news about our new upgraded service, where this is all headed and what it means to you.

For the past year plus, I've been putting out this underground newsletter, establishing an independent voice covering the most exciting, insane and twisted industry on earth during the most tumultuous days in its history. It's been a thrill to cover it, and immensely gratifying to be able to do it thanks to all the folks who have supported this endeavor with your time, wisdom, insights, advice, tips from behind the curtain, and, very importantly, your subscriptions which have allowed me to keep doing this.

Now it is time to turn this little hot dog stand into something more substantial so that I can have the stability to devote myself 1000 percent to this and grow it in exciting new ways, to provide even more coverage for you.

The first part of this transition is The Ankler has moved to join Substack, the company that has really been pioneering the newsletter revolution by developing tools to create a complete content house in the hands of independent publishers.

What the heck does this mean to you and what the hell do you care if I move to some new platform? 

Well . . . it will mean a new look for the Ankler. The same basic style but more streamlined from what sometimes looked like a hoarder’s garage of newsletter layout. No doubt it’s going to be a work in progress for a few weeks so bear with us and if you have any thoughts, please send them my way as ever at

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But with an exciting new offer!  The Ankler with Substack is now pleased to announce corporate subscriptions.  Buy a subscription that allows your entire crew to read every dispatch and make sure no one on your team is missing out on what the town is talking about.  Click here to sign up for a group subscription today! 

With this new rate, The Ankler will be able not only to assure its survival but actually, finally grow and start adding more features and broader coverage, while remaining the one true independent voice holding the industry’s feet to the fire.

Among those new features: more issues, more topics, and more voices adding to the mix, bringing the Ankler’s blend of fearless reporting and withering commentary to a much wider purview.

We’ll also be adding two features much requested by readers who have stayed with me through these early beta years: subscriber comments and searchable archives, both of which should be up and running with the changeover. In particular, I’m very excited for comments to start bringing in reader voices to the topics and hopefully spark real discussion on many of these issues; not to mention give you a place to tell me off at a public level. So let ‘em rip.

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I wanted to create something where my only constituent was my committed readers and no one else, and you all have allowed me to do that.

So I’m asking my readers from these early beta days two things:

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This is a preview of today’s edition of The Ankler, the secret news of Hollywood. Want to see it all? Click below to subscribe. You never know who’ll be in the Hot Seat tomorrow…

If you want to judge the impact that The App That Ate Hollywood has had on the whole entertainment ecosystem—and why the whole thing may be poised for a gigantic rearrangement, aka trainwreck, in the very near term—you need look no farther than the WarnerMedia deal with J.J. Abrams. Announced late last week, the deal valued Abrams at officially $250 million, but that could be worth, as someone passed onto THR, “possibly much more thanks to various financial incentives.”

While Ted Sarandos would like to think of himself as the bold innovator re-configuring the potentialities of entertainment, he may well end up going down as the Mark Canton of the streaming age: the man whose reckless, narcissistic spending drove prices up to a place where they made the entire model of filmmaking collapse.

In 1995, when Canton paid Jim Carrey $20 million to make The Cable Guy, there were some stuffy old-thinkers who scoffed that this could upend the business. “A perilous and dangerous precedent,” warned Mike Medavoy. “I’m making movies to make money. That kind of number with a back-end gross doesn’t make business sense to me,” said Morgan Creek’s James Robinson.

Canton and Sony laughed off the naysayers. They had landed the biggest star in movies. “It was a business decision,” Canton told the LA Times. “And if it’s the right one, it’ll be very profitable.”

If the decisions to lay hundreds of millions at the feet of Ryan Murphy, Shonda Rhimes, Greg Berlanti, and now J.J. Abrams are the right ones, they will be very profitable.

There’s just that “if” they’ve got to get past.

Under normal circumstances, what would it be worth to land the producer whose track record this past decade consists of The Wrong Mans, Castle Rock, Roadies, Westworld, 11.22.63, Believe, Revolution, Almost Human, Fringe, Alcatraz, and Undercovers?

Not all disasters, certainly, but does that look to you like the sort of lineup that a competitor in the Great Entertainment Semi-Finals would have to have, even if we have to pay half a billion for it? Or if were you in the Warner Tsar’s chair, would this be your reaction to the chance to land the producer of Roadies? “CEO John Stankey made it his personal mission to secure a new deal with Bad Robot.”

Yes, he produced Lost back in 2004, and in Fourteen Hundred and Ninety-Two, Columbus sailed the ocean blue, but neither of them has matched that success lately.

Of course, he’s directed (and produced) a lot of big movies, but presumably, he’s still available to go anywhere to direct big movies for a fee, as he demonstrated with his loyalty to Paramount during that era of Bad Robot. Presumably Warners will still have to pay him if he directs their big movies.

In fact, as the source of the THR piece made clear,

The ability to sell product to other outlets—i.e. setting up Lisey's Storyone of his three shows at Apple via Warner Bros. TV—was paramount to Bad Robot signing anywhere.

(By the way, it is the most Abramsesque thing of all to leak to the press: You know I could’ve gotten half a billion if I wanted.)

When we add it all up, what is it costing the TV industry just to take care of its top-20 producers?  What is that total price tag going to look like once all their shows are in production? Does anyone think that this is a sustainable model even for the winners of this round of the Great Entertainment Semi-Finals?

With 7,000 shows sloshing around out there in the streaming jungle, all trying to get attention, what is even the guarantee that the Next Giant Thing, or the Next 10 Giant Things, will come out of this group at all? TV breakthroughs, as often as not, don’t come from the seasoned workshops, but rather from newish upstarts, breaking out with something no one would’ve ever thought of before. Who the hell were Benioff and Weiss before GoT? Would anyone have given them a $250 million overall deal?

Now that we mention it, how many of the Giants have matched their early successes? Has J.J. produced anything anywhere in the neighborhood of Lost? Has Shonda created anything with the staying power of Grey’s? ?

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This is a preview of today’s edition of The Ankler, the secret news of Hollywood. Want to see it all? Click below to subscribe. You never know who’ll be in the Hot Seat tomorrow…

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