If you think about the telephone for years to use a phone people needed to have lines coming into the house and the biggest company in the world which did that was AT&T. The logistics of the connecting of the lines meant it was a very good thing to have a monopoly because the act of placing the lines on poles and in the ground was very capital intensive. The capital costs would keep up competitors, all went well until the invention of the mobile phone and then the model changed. It took a few years and now people’s first choice is mobile. When the choices of the consumer changed, the company with all the assets had to ask could the assets be used for something else? The answer was yes and telephone companies ended buying media companies because they could send the content down the similar system. AT&T bought Time Warner and all was good, until consumers changed what they wanted and willing to pay for. Mobile communications have continually improved and during wait times, consumers are buying streaming services to watch media.

The resulted in declining revenues for AT&T which means content is no longer king at the telephone system. In an article by Reuters, AT&T which is the controlling shareholder of Time Warner has decided to merge its media assets with the Discovery Inc. The Discovery Inc has programs such as HGRV, TLC, Animal Planet and a host other programming. AT&T bought Time Warner for $108.7 billion in 2018. The new company of Discovery which had a market value of $30 billion would be valued at $150 billion. Prior to the merger, Discovery Channel reached 88.3 million homes in the US and its Discovery Plus had 15 million subscribers. HBO and HBO Max has 63.9 million subscribers. The competition of Netflix has 207.6 million subscribers and Disney Plus has over 100 million subscribers.

Linking to dividend paying stocks, every large company which has regular stable income always looks to enhance it. The companies examine their assets and see what would consumers pay for and we have a built in advantage. How it is executed and how well it does are different questions because the regular stable income portion of the company tends to require different management skills. The ability to grow requires more competitive management skills and the people have to fight for a larger piece of the budget to do their work. Consumers change and companies have to change to be valued as highly multiple as possible and stay profitable. If they are profitable, then strategies can be altered as long as the profitable aspects of the business remain for shareholders who are interested in that aspect of the business.

There are more questions than answers, till the next time – to raising questions.