AT&T Inc. (NYSE:T) is looking for potential buyers of its gaming division Warner Bros Interactive Entertainment. Immediate reports indicate that the wireless carrier has opened talks with potential suitors as it looks to divest the unit for as much as $4 billion. A good chunk of the amount is to go towards offsetting part of the company’s $200 billion massive debt.
AT&T acquired Warner Bros through the $109 billion acquisition of Time Warner. Best known for video game titles such as Harry Potter, Game of Thrones as well as The Lego Movie, Warner Bros Interactive owns 10 game studios. Through the studios, it has churned some of the biggest titles in the gaming industry.
The unit has reportedly attracted interest from the likes of Electronic Arts Inc. (NASDAQ: EA) and Activision Blizzard, Inc. (NASDAQ:ATVI). Take-Two Interactive Software (NASDAQ: TTWO) is also reportedly in the race to acquire the AT&T gaming unit.
However, a major game company has reportedly pulled out in the running of the unit. The company has pulled off because Warner Bro International makes money intermittently and does not own some of the major franchises that account for a huge chunk of its revenues.
For instance, it does not own a Harry Porter license. Similarly, there are concerns as to whether author J K Rowling would be willing to license the game to a new owner other than AT&T. Likewise, it does not own DC Comics property, which Batman Arkham uses.
Activist Investor Pressure
A push to sell Interactive Entertainment comes weeks before Warner Media CEO, John Stankey, takes over as AT&T CEO, replacing Randall Stephenson. AT&T has come under immense pressure in recent months to divest some of its units in a bid to generate some value for shareholders.
Hedge Fund, Elliot Management acquiring stakes worth $3.2 billion, is believed the catalysts behind the divestment push. The activist hedge fund is reportedly pushing for the sale of DirecTV, a transaction that the incoming CEO has vehemently opposed. In addition to activist investor pressure, AT&T appears to be under immense pressure from investors to sell assets.