AT&T’s WarnerMedia restructuring breaks apart Turner Broadcasting

The Wall Street Journal, citing unnamed sources, said the overhaul is expected to lead to cost cutting and layoffs that will certainly impact Atlanta operations. It noted that Dallas-based AT&T is "currently saddled with about $170 billion in net debt, the most of any non-financial U.S. company."

Turner still has more than 6,000 employees in Atlanta centered mostly at CNN Center and the Techwood campus. Affiliate relations, operations and marketing departments are heavily represented locally. Turner Sports, Cartoon Network and Adult Swim largely operate out of Atlanta along with significant portions of CNN, CNN International and HLN, which recently centralized live programming back to CNN Center.

Top executives for Turner over the years have largely migrated to the entertainment power centers of Los Angeles and New York.

» A piece of Ted Turner's legacy is disappearing from Atlanta

AT&T in a statement Monday, bluntly stated that Atlanta will remain a cog in its media operations: “The Atlanta office and operations will continue to exist. There are no plans to close it down.” How Atlanta operations will exist in terms of size and scope going down the road is not clear.

An AT&T spokesperson said “this is not a cost-cutting exercise.” Rather, “it is about strengthening our ability and capabilities to invest in and develop more content for our global audiences” and “find efficiencies in our companies to ensure that we are better focusing our investments and resources into developing content and not on duplicative administrative functions or processes.”

Under the new AT&T model, Robert Greenblatt, former chairman of NBC Entertainment who has also run Showtime and Fox, will lead the Direct-to-Consumer business overseeing WarnerMedia Entertainment, which includes HBO and three Turner networks: TNT, TBS and truTV. He will also design a new streaming service. David Levy, who ran Turner Broadcasting the past six years out of New York, announced his departure on Friday after 33 years at the company.

HBO and Turner’s entities have to date worked as fiefdoms in a sense within Time Warner. That will no longer be the case.

“This company in the past has tended to be a collection of separate entities that had their own visions and goals,” Greenblatt told the Wall Street Journal Monday. “If you are looking at the modern world, it is really incumbent on us to figure out how to manage them in a really smart way together.”

Jeff Zucker, who oversees CNN, CNN Digital and HLN, will also take over all the sports operations including Turner Sports, Bleacher Report and the AT&T Regional Sports Networks. The new division's name: WarnerMedia News & Sports. Basically, Zucker will run all live TV-related programming.

Warner Bros., another division of WarnerMedia, will oversee Cartoon Network, Adult Swim, Boomerang and Turner Classic Movies. It will be run by Warner Bros. Chairman and CEO Kevin Tsujihara and is described as a "new global kids and young adults business" in the release although TCM doesn't quite fit that description. Warner Bros. already runs its own animation studio DC Entertainment.

"This change will provide the company with the agility and flexibility needed to build WarnerMedia's brands across a variety of evolving distribution models with a more coordinated approach to the company's original programming," the company said in the Monday morning announcement.

AT&T, which was already moving some of its Atlanta telecom jobs to Dallas, is facing increasing competition from the likes of Amazon, Netflix, Apple and Facebook for ad dollars and streaming viewership. The traditional cable model perfected by Turner is being challenged as more people stop paying for cable or satellite subscriptions or never sign up in the first place.

An AT&T spokesperson said Turner Broadcasting brand is unnecessary under the restructuring and the company will be “evolving the Turner brand into the WarnerMedia brand in the weeks and months ahead.” The management’s focus will be to continue to protect the “character and uniqueness” of the specific channel brands such as TBS and TNT.

“We will work diligently to sustain the brand character and culture of these proud and storied businesses through our focused creative processes and product line profitability,” the spokesperson said.

Credit: Paul Burnett

Credit: Paul Burnett

>>RELATED: Turner Broadcasting timeline

This is another symbolic step in what has been a gradual disappearance of the vanguard spirit of Turner Broadcasting's creator Ted Turner.

"Turner redefined the business when cable became king," said Frank Sesno, a former CNN correspondent who is director of the School of Media and Public Affairs at George Washington University. "It was part of the consolidation of the media business into these handful of behemoth companies. Like the airlines, we are down to a few choices. To me, the revolution continues."

Turner, who incorporated Turner Broadcasting System in 1965, created the first national satellite cable network with the so-called Channel 17 “SuperStation” in 1976, which became TBS in 1979.

Under that corporate umbrella, Turner launched CNN in 1980, CNN2 (which is now HLN) in 1982, TNT in 1988, Court TV (now truTV) in 1991, Cartoon Network in 1992 and Turner Classic Movies in 1994.

He sold Turner Broadcasting to New York media giant Time Warner in 1996 and left the board in 2006 regretting the ill-fated 2000 merger with AOL, which cost him billions of dollars.

With the end of Turner Broadcasting as a name, the only vestige of Turner’s name at the company will be his beloved TCM, which largely airs old films from the 1930s to the 1960s. It’s doubtful Turner Sports a name will survive that part of the restructuring.

Credit: CURTIS COMPTON / AJC

Credit: CURTIS COMPTON / AJC

"It's the end of an era," said Bill Tush, a close friend of Turner's who did satirical news for TBS back in the 1970s and worked for CNN for more than two decades until 2002. "AT&T. It's just three scary letters, a giant corporation, not even a person. Even before AT&T, it always felt like to me that they were gradually trying to erase Ted from the company."

Turner late Monday released a statement:

This is the second blow to Atlanta’s corporate ego in a month after Charlotte-based BB&T announced it was buying Atlanta-based SunTrust.

AT&T has a financial incentive to keep at least some operations in Atlanta. Sports programming such as “NBA on TNT” qualify for the state’s generous tax credits. And it’s less costly to operate many of its back-office functions in Atlanta vs. New York or Los Angeles. Plus, it already has invested tens of millions in infrastructure over the years at the Midtown Techwood campus and downtown CNN Center.

All this is happening so quickly in part because the merger has been a long time coming. AT&T originally announced it was buying Time Warner for $85.4 billion in 2016 but the Department of Justice, citing anti-trust concerns, held up the merger for an unusually extended period of time. The DOJ only last week finally gave up the fight, opening the floodgates to a host of immediate and impending changes.

Stock analyst Keith Snyder of CFRA Research, wrote that "we see this restructuring as a positive, as it moves WarnerMedia away from the outdated siloed approach to content creation, towards a structure similar to Disney and NBC Universal."

Sesno remembers covering the government-ordered breakup of monopoly telecom company AT&T for CNN in the early 1980s. Now, he said, AT&T has surprisingly managed to survive and thrive in a completely new environment. Although it’s not a monopoly as it was in the phone business decades yore, it’s become major media player with the purchase of Time Warner, once considered a crown jewel in the entertainment and news world.

“There’s a tremendous book or documentary about AT&T’s reinvention and emergence as a giant in media,” he said.

Matt Kempner contributed to this story