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vitorgrs t1_j9ryh7i wrote

Reply to comment by WR810 in Warner Bros. Discovery Sees $2.1 Billion Loss in Q4 After Big Writedown; Ad Sales Tumble by Neo2199

Never said the their entire debt was new. Just saying Discovery indeed create a 30bi+ debt to acquire Warner. It's a fact.

https://deadline.com/2022/03/discovery-debt-sale-warnermedia-merger-att-1234974970/

The thing was, we don't really know how much WarnerMedia division had in debt prior to the sale because it was unified with AT&T.

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WR810 t1_j9rz4xz wrote

Obviously new debt was created to pay off the old debt.

The point was Warner Brothers and its properties have been mismanaged well before Discovery and was a major albatross around AT&T's neck. We would see reductions like this even if Discovery hadn't borrowed the money to buy Warner Brothers because the last owner was also indebted.

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vitorgrs t1_j9rzsi4 wrote

Obviously that would happen a with every new sale/merger, the new owner usually try to cut costs and do "synergy cuts".

But if the new owner didn't had enough money in cash to buy the company, obviously the problem with debt get's bigger, as now you need to make the new company profitable to pay it's own debts, and to pay the debts that it made to buy it.

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WR810 t1_j9s06l1 wrote

AT&T already wasn't profitable with Warner Brothers.

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vitorgrs t1_j9s203n wrote

Yes, and I never said otherwise... Read again.

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WR810 t1_j9sabtx wrote

>Read again.

What you did say was "you now need to make the new company profitable" as if Warner Brothers' mismanagement were substitutable. If Discovery hadn't purchased Warner Brothers then AT&T would have had to make similar cuts at some point.

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vitorgrs t1_j9safz1 wrote

Again, I never said they wouldn't need that. I'm saying Discovery created a even BIGGER problem, because they literally created 30bi more in debt. It's that simple actually.

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WR810 t1_j9sbqo7 wrote

>It's that simple actually.

Again, I'm telling you that it's not.

Discovery didn't create billions in debt. That debt existed on a AT&T balance sheet from well before the merger. Discovery just moved that debt from AT&T's balance sheet to their balance sheet in return for Warner Brothers (basically). The liabilities attached to Warner Brothers were nothing new.

As per my second comment we would see cuts and reductions in Warner Brothers if AT&T sold or not because AT&T was in debt and because AT&T mismanaged Warner Brothers.

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GarlVinland4Astrea t1_j9tmuq0 wrote

What you are missing that others are pointing out is that WB was in such bad shape that it didn't matter if Discovery was involved.

  1. If it stays with AT&T it's such a big loss that they start similar cutdowns.
  2. If they find a non Discovery buyer, AT&T are folding debt into the sale and the buyer would assume that and still have to make cut downs.

There was no third option where WB doesn't have significant debt and doesn't need a massive overhaul. As others have said, companies that could have taken on the debt, didn't want it. It was just mismanaged for years. When everybody loved HBO Max, they were basically burning money as fast as they could and everyone knew it.

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