At what point in the last five days did AT&T have a moment of creeping doubt that this whole desire to be a player in Hollywood may not be worth the headaches?

Was it when someone leaked the audio of its private town hall with some HBO employees to The New York Times? Or was it the DOJ deciding to commemorate AT&T’s one-month anniversary of the latest deal of the century by appealing the ruling in the antitrust case that allowed the telco giant to acquire Time Warner? Was it the thudding disappointment in the tech of the future it invested in and agreed to be its exclusive distributor?

Hard to say! They are all rather Stankey.

Sure, it’d be wonderful to be one of the handful of companies to remake the global order of media and entertainment and take a big share of the half a trillion dollars at stake annually, but to get there, you have to survive weeks like this one.

Here’s what you need to know from week 4 in AT&T’s Quest for Relevance:

1. The HBO leak looked bad but was actually good

I am not going to endorse any old white guy comparing business transformation to childbirth–and worse, acknowledging as he’s doing it that he shouldn’t be saying it–but HBO is in fact the perfect, if not only, vehicle in the whole WarnerMedia universe through which AT&T can try to turn itself into a competitor to Google and Facebook. While many in the media have seized upon the idea that WarnerMedia chief John Stankey was suggesting that HBO needed to be more like Netflix, he not only never uttered the word Netflix but even Netflix knows the game is now competing against Google’s YouTube. Netflix CEO Reed Hastings has cited his YouTube envy several times in terms of how much time users spend there (approximately seven times more than Netflix), and it’s undoubtedly part of the reason Netflix is now making shorter-form programs such as 15-minute comedy specials.

But HBO, like Google, is a beloved brand, and that means if you play it right, you can do a lot of stuff that may seem kind of evil, let’s say, if most people love you and have built up a lot of strong positive feelings about you. So if AT&T wants to build a major streaming service that includes more programming and is monetized through mining behavorial data to feed marketers, if it doesn’t get too greedy, too soon–a big if!–it could do so under the HBO banner in a way that it never could under any of its other networks. Signaling that to its rivals and Wall Street, which loves Facebook and Google’s business model the way you love your children, was a wise move.

2. The DOJ appeal seems quixotic but could be very very bad

It would seem rather extraordinary if a court of appeals unwound a thing that went through. Can AT&T return the shoes and jewelry it bought to match its wedding dress if the marriage gets annulled? It’s almost certainly not going to get back the deposit for the hall. (On the bright side, Warner Bros executives can continue to fly the corporate jet without fear of any public shaming.)

Short of the DOJ trying a completely new legal theory to dismantle this union, the big issue is that it could slow down AT&T’s rather impressive, aggressive moves to get into the game with Netflix, Disney, Google, Amazon, Facebook, Apple, and whoever else survives. As we’ve chronicled (and are still chronicling in this very article!) AT&T is acting quickly, as it should be, because speed is of the essence in this current environment. Another messy and protracted legal fight likely means that AT&T may need to ease up, and in the best case scenario, try to queue up moves as it did during the first DOJ battle. On the bright side, though, it likely means no more consumer price hikes for the foreseeable future!

3. The Magic Leap deal was fun for about six hours

Ah, the future! So unpredictable. In the rarified air of Aspen or Sun Valley, it’s easy to sound like a genius prattling on about mixed reality and Jesus glasses and what the kids are doing on Snapface, or whatever. Imagine how heady it must have been AT&T execs to whiff those fumes, the kind pumped through the HVACs in Mountain View and SOMA, and Dania Beach, Florida, to feel like they were furthering the future with their investment in the much-hyped startup and deal to be its exclusive distribution partner.

Then Magic Leap released its latest demo on Wednesday. Once upon a time, in 2014 and even as recently as 2016 if you can remember that far back, a Magic Leap video and corresponding funding announcement was the subject of gee whiz delirium. The latest demo inspired the kind of scorn now reserved for John Gotti biopics. No one in the entertainment press declared Gotti to be a “death knell” for the future of cinema, although we wouldn’t have blamed them if they had.

Google can invest in Magic Leap and have the whole thing go sideways, and who cares? Its create-the-future bona fides are secure that it can afford any number of harebrained schemes. Also, it runs the most successful cash machine ever created. If it had to write down its Magic Leap investment to zero today, it’d be like you or me having some change slip out of our pocket on the bus. But for AT&T, it’s been awhile since it was in the cutting-edge-of-technology business. We’re a long way away from the videophone debuting at the 1962 Seattle World’s Fair!

That’s why AT&T needs to get hustling on that Google-style business model. Pays for a lot of bad weeks like this one.




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