AT&T announces $ 5.5 billion loan, may announce impending layoffs

Top line: AT&T was already heavily in debt before the pandemic, announced a new $ 5.5 billion loan and said it would cut back on its activities to generate cash, a sign that the media giant could initiate layoffs.

• The new loan adds to AT & T’s massive $ 163 billion debt burden battered by his purchases by DirecTV in 2015 and Time Warner (now WarnerMedia) in 2018.
• With $ 12 billion in cash, AT&T said it would be able to generate more money by “aligning our operations with economic activity”; Often the reduction in operations leads to layoffs.
• With the coronavirus bringing the entertainment industry to a standstill, AT&T wouldn’t be the first media company to lay off employees or take leave of absence: Disney, Endeavor and AMC theater had to take such steps.
• The company won’t cut its quarterly dividend payments to investors, another potential source of cash.
• Wall Street was happy with the announcement, and AT & T’s stock rose more than 3% at the start of trading.

Key background: The $ 85 billion acquisition of Time Warner by AT&T and its legacy brands such as Warner Bros. and HBO made AT&T one of the big players in Hollywood. But with cinemas closed, productions suspended, and advertising revenue soaring, this is a very bad time for show business. New WarnerMedia CEO Jason Kilar will have his job for him when he comes in May.

What to look out for: AT & T’s zippy new streaming service, HBO Max, is set to hit fan favorites like next month. debut Friends, South Park and Sex and the City. Though there is big appetite for streaming among the domestic audience, for $ 14.99 per month, HBO Max is one of the most expensive services out there.

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