AT&T is offering its Warner Bros. Interactive Entertainment (WBIE) division up for sale, according to a CNBC report as well as our own reporting.
Citing unnamed sources, CNBC said Friday that potential bidders included Take-Two Interactive, Electronic Arts, and Activision Blizzard. If the sale happens, it would be a major change for Hollywood and its relationship with the industry, as most major studios are opting to get out of the game business, reversing a trend from earlier decades where they loaded up on dev studios.
Two sources confirmed to GamesBeat that the report is correct in terms of the division being up for sale. WBIE has not commented on this. Both EA and Take-Two declined to comment. Activision Blizzard did not respond to the request for comment.
CNBC said the price could be about $4 billion. But one of my sources said the price offered was $2 billion. A major game company said it was not interested in the purchase because WBIE only intermittently makes money, and it does not own some of the major franchises that are at the core of its major games. It does not, for instance, own the Harry Potter license, as it is not clear if author J.K. Rowling would approve a transfer of the license from Warner Bros. to another game company. Nor does it own the DC Comics property, which the Batman Arkham and Injustice franchises use.
No deal is assured or imminent, CNBC said. WBIE has 10 game studios, which David Haddad heads. The company makes a wide array of games such as Harry Potter, Lego, Mortal Kombat, Batman Arkham, and Game of Thrones. It also has quirky mobile titles like Golf Clash, and this year it’s launching Lego Star Wars: The Skywalker Saga.
WBIE’s studios include TT Games, Rocksteady Studios, NetherRealm Studios, Monolith Productions, WB Games Boston, Avalanche Software, Playdemic, WB Games Montreal, WB Games San Francisco, and WB Games San Diego. WBIE stands out as one of the few successes in the marriage of Hollywood and games, and it is a kind of crown jewel of the game business.
Last year, rumors also emerged that AT&T, which acquired WBIE through its $109 billion Time Warner acquisition, was planning to sell WBIE to help reduce its $200 billion in debt. It shelved that plan, viewing WBIE as a prize asset. But during the current recession, made worse by the coronavirus and the recent unrest, AT&T is under more financial pressure from shareholders to sell assets.
On top of that, former Warner Media CEO John Stankey is replacing Randall Stephenson as CEO of AT&T on July 1.
As for Hollywood and games, a number of the movie studios are doubling down on the streaming wars as they try to deal with the lockdown of movie theaters. Games, of course, would be a great way for the entertainment companies to go digital. But the heavy investments in streaming of movies and TV shows are taxing the Hollywood companies. Disney+ was successful in getting a lot of users, and that is prompting the other studios to follow suit, said one observer who asked not to be identified.