Warner Media, LLC., founded as Time Warner Inc., was an American multinational entertainment and media conglomerate headquartered at 30 Hudson Yards in Manhattan, New York City. After being acquired by AT&T in June 2018, WarnerMedia was reorganized as a privately-owned subsidiary.
The corporate predecessors to WarnerMedia are Time Inc. and Warner Communications Inc. (WCI). By the late 1960s, both companies began repositioning themselves as major players in cable television and mass media through multiple acquisitions, and they later underwent a stock-swap merger in March 1989, which was fully finalized on January 10, 1990. The newly established company, Time Warner, was the world’s largest media conglomerate for nearly 18 years and pursued further expansion by forming Time Warner Cable in 1992 and acquiring Turner Broadcasting System in 1996. A pivotal moment in Time Warner’s history was its landmark 2001 merger with AOL, which would end up becoming one of the worst business deals in corporate history.
Heavy losses from within AOL led Time Warner to pursue a years-long divestment strategy that culminated with Time Inc.’s spin-off in 2014. Despite spinning off Time Inc., the Time Warner name was kept until June 15, 2018, when AT&T completed its $108.7 billion acquisition of the company and renamed it to WarnerMedia. Under AT&T, a centralized approach was adopted, with the company’s subsidiaries being consolidated into five divisions and HBO Max being launched in 2020, to serve as the company's primary streaming service. These moves were intended to synergize WarnerMedia’s content libraries with AT&T’s wireless distribution, to reposition the telecom giant as a diversified entertainment giant, but lackluster results led AT&T to reverse course.
On May 17, 2021, AT&T announced that it would spin off WarnerMedia through a Reverse Morris Trust and have it merge with Discovery, Inc. to establish a new, publicly traded company. This new company, Warner Bros. Discovery, began operating on April 8, 2022, and assumed management of WarnerMedia’s assets. After the merger closed, WarnerMedia became an inactive shell corporation. In 2018, the company was ranked number 130 on the Fortune 500 list. Throughout its nearly 32-year run as a company, WarnerMedia owned a variety of large media companies (including AOL, Time Inc., TW Telecom, Time Warner Cable, AOL Time Warner Book Group, Six Flags, and Warner Music Group). These companies were either sold or spun off as independent companies.
Warner Communications and Time Warner's founder, Steve Ross, died on December 20, 1992, at the age of 65, due to complications of prostate cancer, from which he suffered in his final years. Time Warner's co-founder, Richard Munro, later died on May 9, 2024, at the age of 93.
Contents
History
Kinney National and Warner Communications (1969–1990)
WCI's history stems back to Kinney National Services, which purchased the Warner Bros.-Seven Arts film studio in 1969, and later reincorporated as Warner Communications Inc. (WCI) in 1972 after divesting non-core businesses. Kinney National (renamed to Kinney Services) originally began as a service-based conglomerate, but after purchasing several entertainment businesses during the late 1960s, Kinney soon pivoted away from the service industry. By mid-1971, Kinney separated its non-media businesses into National Kinney Corporation
At its reincorporation, Warner Communications served as the parent company for Warner Bros, National Periodical Publications (predecessor to DC Comics), Warner Cable (later Time Warner Cable), and Kinney Record Group International (renamed Warner-Elektra-Atlantic). Warner's longest-serving executive was Steven Ross. By 1984, Steven Ross was the sole Chairman, Chief Executive, and President of Warner Communications. The company made investments into the Sports Industry through Global Soccer Inc. and formed a joint venture with American Express known as Warner-Amex Satellite Entertainment. Warner-Amex would launch several cable channels, including MTV, Nickelodeon, and VH1. In May 1986, this venture was sold to the original Viacom. A noteworthy acquisition done by Warner Communications was its purchase of Atari Inc. in 1976. For several years, Warner enjoyed success with the gaming company until the sudden Video Game Crash of 1983. Suffering extensive losses, Warner divested parts of Atari along with several other companies it owned, and by the mid-1980s, WCI had rebounded in its financial performance.
Warner Communications' headquarters were at 75 Rockefeller Plaza in New York City. It had 26,300 employees in 1985, and operating income of US$7.965 billion in 1986. Its main divisions were:
Warner Bros., Inc.
Warner-Elektra-Atlantic
Warner Cable
Warner Books
Lorimar-Telepictures
Atari Games Inc.
Time Warner/Time Warner Entertainment (1990–2001)
After several rounds of merger discussions, Time Inc. announced on March 4, 1989, that the two companies were to merge. If Warner and Time were to be successful in their merger, it would result in the world's largest media company. In response, Paramount Communications launched a counterbid of $12.2 billion to acquire Time Inc. in a stock-swap deal to block the merger. Time rejected Paramount's offer and requested a bigger bid of $14.9 billion. In response, Paramount filed a lawsuit in a Delaware Court to block the Time/Warner merger. The courts ruled in Time's favor twice, leading Paramount to end both its Time Inc. bids and the lawsuit and allowing the Time Warner merger to proceed on January 10, 1990.
Legally, the merger was structured as an acquisition of Warner Communications Inc. by Time Inc., with the latter changing its name to Time Warner Inc. The lawsuit by Paramount caused the mechanism of the merger to be changed such that Time Inc. had to take on significant debt to outright purchase all Warner Communications Inc.'s outstanding shares, which would not have been necessary in the original merger mechanism.
On June 30, 1992, Time Warner transferred most of its film, television production, music and cable businesses, including the Warner Bros., HBO, and Time Warner Cable assets, into Time Warner Entertainment Company, L.P. (TWEC), a new limited partnership with Toshiba and C. Itoh & Co. where each invested US$500 million for a 6.25% share. The deal announced in October 1991 was intended to relieve debt pressure from the Time Inc.–Warner Communications merger.
In 1993, US West joined the partnership with a US$2.5 billion investment for a 25% share. As part of the partnership, US West formed Time Warner Communications (also utilized as the brand name for cable operation previously under the ATC name), in order to bring telephone via fiber to the masses. By 1996, TWEC was owned 74.49% by Time Warner and the remainder by US West.
US West's stake eventually passed to acquired cable company MediaOne, then to AT&T Broadband in 1999 when that company acquired MediaOne, then finally to Comcast in 2001 when that company bought the AT&T Broadband division. Comcast sold their stake in the company in 2003, relegating the name to a subdivision under Time Warner Cable.
AOL Time Warner (2001–2003)
In January 2000, America Online (AOL) stated its intentions to purchase Time Warner for $183 billion. Due to the larger market capitalization of AOL, their shareholders would own 55% of the new company while Time Warner shareholders owned only 45%, so in actual practice AOL had merged with Time Warner, even though Time Warner had far more assets and revenues. Time Warner had been looking for a way to embrace the digital revolution, while AOL wanted to anchor its stock price with more tangible assets.
The deal, officially filed on February 11, 2000, employed a merger structure in which each original company merged into a newly created entity. The Federal Trade Commission (FTC) cleared the deal on December 14, 2000, and gave final approval on January 11, 2001; the company completed the merger later that day. The deal was approved on the same day by the Federal Communications Commission (FCC), and had already been cleared by the European Commission (EC) on October 11, 2000.
AOL Time Warner was supposed to be a merger of equals with top executives from both sides. Gerald Levin, who had served as chairman and CEO of Time Warner Entertainment, was CEO of the new company. AOL co-founder Steve Case served as executive chairman of the board of directors, Robert W. Pittman (president and COO of AOL) and Dick Parsons (president of Time Warner) served as co-chief operating officers, and J. Michael Kelly (the CFO from AOL) became the chief financial officer.
According to AOL president and COO Bob Pittman, the slow-moving Time Warner Entertainment would now take off at Internet speed, accelerated by AOL: "All you need to do is put a catalyst to [Time Warner Entertainment], and in a short period, you can alter the growth rate. The growth rate will be like an Internet company." The vision for Time Warner's future seemed clear and straightforward; by tapping into AOL, Time Warner would reach deep into the homes of tens of millions of new customers. AOL would use Time Warner's high-speed cable lines to deliver to its subscribers Time Warner's branded magazines, books, music, and movies. This would have created 130 million subscription relationships.
However, the growth and profitability of the AOL division stalled due to advertising and loss of market share to the growth of high-speed broadband providers. The value of the AOL division dropped significantly, not unlike the market valuation of similar independent internet companies that drastically fell, and forced a goodwill write-off, causing AOL Time Warner to report a loss of $99 billion in 2002 — at the time, the largest loss ever reported by a company. The total value of AOL stock subsequently went from $226 billion to about $20 billion.
Time Warner (2003–2018)
In June 2003, the company dropped the "AOL" from its name, and reverted itself to Time Warner, with its ticker on the New York Stock Exchange also being reverted to "TWX" from "AOL". The company also spun off Time-Life's ownership under the legal name Direct Holdings Americas, Inc. Case resigned from the Time Warner board on October 31, 2005. Jeff Bewkes, who eventually became CEO of Time Warner in 2008, described the 2001 merger with AOL as 'the biggest mistake in corporate history' in 2010.
In November 2003, Time Warner announced they would sell Warner Music Group, which hosted a variety of acts such as Madonna and Prince, to an investor group led by Edgar Bronfman Jr. and Thomas H. Lee Partners, in order to cut its debt down to US $20 billion. Time Warner then sold its books group to Lagardère in 2006.
On December 27, 2007, newly installed Time Warner CEO Jeffrey Bewkes discussed possible plans to spin off Time Warner Cable and sell off AOL and Time Inc. This would leave a smaller company made up of Turner Broadcasting, Warner Bros. and HBO. In 2009, Time Warner spun out its Time Warner Cable division (which is now part of Charter Communications), and later AOL, as independent companies; AOL was later purchased by Verizon in 2015.
On March 6, 2013, Time Warner intended to spin off its publishing division Time Inc. as a separate, publicly traded company. The transaction was completed on June 6, 2014.
In 2005, Time Warner was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush.
On February 28, 2008, co-chairmen and co-CEOs of New Line Cinema Bob Shaye and Michael Lynne resigned from the 40-year-old movie studio in response to Jeffrey Bewkes' demand for cost-cutting measures at the studio, which he intended to dissolve into the Warner Bros. Entertainment subsidiary.
In the first quarter of 2010, Time Warner purchased additional interests in HBO Latin America Group for $217 million, which resulted in HBO owning 80% of the equity interests of HBO LAG. In 2010, HBO purchased the remainder of its partners' interests in HBO Europe (formerly HBO Central Europe) for $136 million, net of cash acquired. In August 2010, Time Warner agreed to acquire Shed Media, a television production company, for £100 million. Its distribution operation, Outright Distribution, was folded into Warner Bros. International Television Production. On August 26, 2010, Turner acquired Chilevisión. Turner already operated in the country with CNN Chile.
WarnerMedia (2018–2022)
On June 14, 2018, AT&T announced that it had closed the acquisition of Time Warner. Jeff Bewkes stepped down as CEO of Time Warner while retaining ties with the company as senior advisor of AT&T. John Stankey, who headed the AT&T/Time Warner integration team, took over as CEO. On the next day, AT&T renamed the company as WarnerMedia (legally Warner Media, LLC).
On July 12, 2018, the Department of Justice filed a notice of appeal with the D.C. Circuit to reverse the District Court's approval. Although the Department of Justice reportedly contemplated requesting an injunction to stop the deal from closing after the District Court's ruling, the department ultimately did not file the motion because WarnerMedia's operation as a separate group from the rest of AT&T would make the business relatively easy to unwind should the appeal be successful. The next day, however, AT&T CEO Randall Stephenson told CNBC that the appeal would not affect its plans to integrate WarnerMedia into AT&T, or services already launched. In a brief filed by the Justice Department, it was argued that the decision to approve the acquisition ran "contrary to fundamental economic logic and the evidence".
On August 7, 2018, AT&T acquired the remaining controlling stake in Otter Media from the Chernin Group for an undisclosed amount. The company operated as a division of WarnerMedia.
On August 29, 2018, Makan Delrahim told Recode that if the government were to win the appeal, AT&T would only sell Turner and if they lost the appeal then the February 2019 expiration of a consent decree AT&T reached with the Justice Department shortly before the deal closed would allow AT&T to do what they want with Turner. The appeal was expected to have zero impact on the integration. By September 2018, nine state attorneys general sided with AT&T on the case.
On October 10, 2018, WarnerMedia announced that it would launch an over-the-top streaming service in late 2019, featuring content from its entertainment brands. On December 14, 2018, Kevin Reilly, president of TNT and TBS, was promoted to chief content officer of all WarnerMedia digital and subscription activities, including HBO Max, reporting to both Turner's president David Levy and WarnerMedia's CEO John Stankey. The U.S. Court of Appeals in Washington D.C. unanimously upheld the lower court's ruling in favor of AT&T on February 26, 2019, stating it did not believe the merger with Time Warner would have a negative impact on either consumers or competition. The Justice Department declined to appeal the decision further, thus allowing the consent decree to expire.
Spin-off from AT&T and merger with Discovery, Inc.
On May 16, 2021, it was reported that AT&T was in talks with Discovery, Inc.—which primarily operated television channels and platforms devoted to non-fiction and unscripted content—for it to merge with WarnerMedia, forming a publicly traded company that would be divided between its shareholders. The proposed spin-off and merger was officially announced the next day, which is to be structured as a Reverse Morris Trust. AT&T shareholders would receive a 71% stake in the merged company, which is expected to be led by Discovery's current CEO David Zaslav.
Electronic Arts, who were a bidder in the proposed sale of Warner Bros. Interactive Entertainment, purchased the mobile gaming studio Playdemic from WBIE for US$1.4 billion in June 2021.
In September 2021, WarnerMedia sold TMZ to Fox Corporation in a deal worth about $50 million, with TMZ being operated under the Fox Entertainment division.
In November 2021, Discovery and WarnerMedia discussed a plan to combine the two streaming services, HBO Max and Discovery+, into one streaming service in two phases: an initial phase that allows for quick bundling of the services and a second phase that allows for a common service on one tech platform. In the same month, it was announced that Discovery would rename itself Warner Bros. and reclassify and convert its stock into stock of WBD.
On December 22, 2021, it was announced that the deal was approved by the European Commission and it was scheduled to be completed on April 8, 2022, subject to approval by Discovery shareholders and additional closing conditions.
On January 5, 2022, The Wall Street Journal reported that WarnerMedia and ViacomCBS (now known as Paramount Global) were exploring a possible sale of either a majority stake or all of The CW, and that Nexstar Media Group was considered a leading bidder. The reports indicated that WarnerMedia and ViacomCBS could include a contractual commitment that would require any new owner to buy new programming from those companies, allowing them to reap some continual revenue through the network. The network's then-president and CEO Mark Pedowitz at the time confirmed talks of a potential sale in a memo to CW staffers, but added that "It's too early to speculate what might happen."
Corporate structure
As of April 2022, just prior to the Warner Bros. Discovery merger, WarnerMedia's executives were
Jason Kilar (Chief Executive)
Tony Goncalves (Executive Vice President, Chief Revenue Officer, Otter Media CEO)
Ann Sarnoff (Chair and CEO of WarnerMedia Studios & Networks)
Jennifer Biry (Chief Financial Officer)
Gerhard Zeiler (President of WarnerMedia International)
Richard Tom (Chief Technology Officer)
James Cummings (Executive Vice President, Chief Human Resources Officer)
Andy Forsell (EVP & General Manager of HBO Max)
David Haddad (President of Warner Bros. Games)
Christy Haubegger (Executive Vice President, Communications, Chief Inclusion Officer)
Jim Meza (Executive Vice President and General Counsel)
Michael Bass, Amy Entelis and Ken Jautz (Interim Co-Heads, CNN)
As of April 2022, its business divisions were:
WarnerMedia Studios & Networks was created in August 2020 from the consolidation of WarnerMedia Entertainment's assets with Warner Bros. Entertainment.
WarnerMedia News & Sports was formed March 4, 2019, to handle Turner Broadcasting's news and sports assets.