Often I have presented the notion that Hollywood, along with the left itself, does not operate organically. By which I mean, they operate on other people’s money rather than their own revenue generation. Resulting in an inevitable moment where external revenue source dries up, or the company itself can no longer meet its debt obligation and folds. This economic function is primarily why companies go broke after getting woke.
Those watch Clownfish TV and Midnight’s Edge understand how even before Covid-19, the industry wasn’t doing particularly well, but the politically driven lockdowns utterly gutted and decimated the entertainment industries financial income. Forcing companies to undertake typical cost-cutting measures. Such as shutting down projects that were not going to be viable profit earners, reorganization of company structure to eliminate part of the bloat to increase both efficiency while decreasing operational costs, and shuttering, shrinking, or selling off unprofitable divisions.
That is in normal circumstances. Circumstances surrounding AT&T are far from normal. The company is in effect nearing bankruptcy as they owe over $150 billion in debt, with $10,004,092,386 owed this year alone and an additional $8,505,559,000 owed in 2021 with 2022 looking even bleaker. The reality is, while Warner Media is alienating the silent majority with their support of Black Lives Matter, it is done on other people’s dime at the expense of the profitability of the company.
Yes, the gaming division has previously had positive income potential. The problem lies in a large segment of that is earned through microtransactions. A revenue source nations around the world are now seeking to make illegal or classify as gambling now that the lockdowns are over. Financially speaking, this means the value of Warner Brothers Games is likely going to be at its highest value at this moment.
Meaning the time to divest from gaming is now. Especially when estimates project the sale could garner $4 billion, as reported by CNBC. Money needed to pay off the massive debt load and appease Elliot Management, who took a 3.2 billion dollar stake in the company in 2019.
The same analysts projecting a $4 billion sale point also claim Electronic Arts, Activision, and Take Two are interested in acquiring the division.
With the financial scrutiny, Activision finds itself under it would be a hard sell to the investors who want to oust the CEO over undeserved bonuses. Electronic Arts remains profitable, but like Warner Brothers Gaming, this is done primarily through loot boxes and microtransactions. Though they are interested, it is unlikely they will pursue the merger at that price point. Take Two Interactive certainly has the revenue to acquire Warner Media. As a bonus, Strauss Zelnick and Paul Singer, who owns Elliot Management who are driving force behind this sale, are certainly friends. Rendering them a contender more difficult to write off.
What analysts have missed is the likelihood of Microsoft or Sony purchasing Warner Media. Having a Harry Potter RPG, Batman IP, and Mortal Kombat be exclusive to their platform for the next generation would more than justify the purchase price for investors. Further, Warner Brothers Games has the distribution rights to Cyberpunk 2077 in North America, so the acquisition has other benefits.
At the end of the day, it is mere speculation who will purchase the division if it is sold at all. Mere interest does not mean they are actively pursuing the acquisition, nor is my guess anything more than an educated guess. Though I lean more towards the console manufacturers acquiring the division, it is anyone’s guess who ultimately will.
Amazon might decide it is the perfect acquisition to boost its video games division. Alternatively, another company might purchase the division to enter the gaming market. We’ll keep you posted on who ultimately does acquire Warner Brothers Games, but who would you like to see acquire them?