John Stankey realized the market favors recurring revenues and narrative over transactional revenues and EBITDA. Last week, the narrative was AT&T had been on the wrong side of a trade with the smartest man in media (Jeff Bewkes) and overpaid for Time Warner. Ironic that two of the five worst acquisitions in history have the same two words: Time Warner — who 18 years previous merged with AOL.
An infirmed stock price is a terrible thing to waste, and AT&T’s underperformance inoculated it against the innovator's dilemma (Ma Bell has less to lose). So it went gangster on theaters, opting for the consumer.
AT&T is poised to recognize an increase of $100 billion or more in market cap in 2021 on its transition from a conglomerate that makes no sense to the world’s largest recurring-revenue firm.