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   films slated for 2021, including big-budget tent poles like “Dune” and   
   “Matrix 4,” would be released simultaneously in theaters and on HBO Max,   
   upending the long tradition of exclusive release to movie theaters.   
      
   While prompted in large part by the collapse of the traditional box office   
   during the pandemic, it also reflected the importance of HBO Max to AT&T’s   
   overall strategy.   
      
   The move generated a storm of criticism, which Mr. Kilar described as   
   “painful” in an interview with The Times. Mr. Stankey staunchly defended   
   him, publicly calling the move a “win, win, win.”   
      
   But the recurring public relations headaches and financial pressures   
   appeared to be weighing on Mr. Stankey. He was ready to wash his hands of   
   the entire media enterprise. At the time, AT&T was faced with a $5 billion   
   or more capital investment to deploy 5G spectrum. That cost, on top of the   
   added billions being consumed by HBO Max, meant AT&T began unraveling its   
   ambitious foray into media.   
      
   In February it announced that it would spin off DirecTV to a private   
   equity group, TPG, though AT&T would still own 70 percent.  In a rare   
   concession, AT&T acknowledged that “some aspects” of the acquisition   
   “hadn’t worked out as expected.”   
      
   Warner Media was next on the chopping block. Mr. Stankey consulted few   
   people about his plans to combine the Warner assets with Discovery and put   
   Discovery’s Mr. Zaslav in charge — the very person he had earlier rejected   
   as a joint venture partner. That left no place for Mr. Kilar, who said he   
   had been kept in the dark until Mr. Stankey told him about it shortly   
   before it was announced.   
      
   Mr. Kilar believed this was a big mistake. Discovery’s popular but down-   
   market unscripted programming — like “Gold Rush” and “Naked and Afraid” —   
   added little of value to Warner’s premium assets. If AT&T was so desperate   
   for capital, it could spin off Warner Media as a stand-alone company,   
   unloading some of its debt. But Mr. Stankey’s mind was made up.   
      
   Mr. Stankey also called Mr. Stephenson just before the deal was made   
   public. “I had zero input,” Mr. Stephenson said. “Had I still been   
   chairman, I would not have advocated taking the business apart.”   
      
   But Mr. Stephenson didn’t convey his disagreement to Mr. Stankey. “You’re   
   sitting in the chair,” Mr. Stephenson recalled telling him.   
      
   AT&T announced the deal with Discovery on May 17, 2021, and what was, in   
   effect, its exit from the media and entertainment business. It was hardly   
   a clean break: AT&T would still name a majority of the new company’s   
   board, and AT&T shareholders would own 71 percent of the shares.   
      
   AT&T’s 2021 results, released last January, showed the relentless pressure   
   on earnings from the soaring costs of producing movies and TV shows. Even   
   though revenue at Warner Media jumped by a billion dollars as the pandemic   
   eased, its adjusted earnings dropped 36 percent. Operating expenses rose   
   38 percent but, even at $8.3 billion, weren’t even half of what Netflix   
   and Amazon were spending.   
      
   After the results were announced, AT&T shares dropped more than 8 percent   
   to just over $19, less than they were at the depths of the pandemic, even   
   as the broad market was soaring to new highs. A month later, AT&T cut its   
   dividend in half.   
      
   At a J.P. Morgan conference in May, an analyst, Phil Cusick, pointed out   
   that Mr. Stankey had “reversed six years of strategic change at AT&T in   
   three months.”   
      
   Mr. Stankey responded that HBO Max “would not be where it is today”   
   without AT&T and that owning Warner Media had “lowered churn” at AT&T,   
   without offering any data to back that up.   
      
   “We got a long way down that path” toward the deal’s strategic objectives,   
   he maintained, but complained that AT&T had never gotten any credit on   
   Wall Street.   
      
   Though lame ducks, Mr. Stankey and Mr. Kilar were still in charge while   
   the deal underwent regulatory review. Plans for CNN+ continued apace, with   
   Mr. Kilar insisting that once it was up and running, it would be   
   impossible for Discovery to kill it, according to Mr. Zucker. There was   
   talk that CNN’s Mr. Zucker would get a big promotion once the deal closed;   
   he and Mr. Zaslav were close friends from their days working together at   
   NBCUniversal.   
      
   Mr. Zaslav had no authority to tell Mr. Kilar what to do, but in a series   
   of conversations he made it clear that he wished Mr. Kilar would delay the   
   debut of CNN+, according to a person familiar with the discussions.   
   Perhaps he was too subtle. That is not the message Mr. Kilar got, and in   
   any event, he was determined to press forward, according to another person   
   involved in the discussions.   
      
   In June, Mr. Zucker made a presentation in Dallas to AT&T’s board, asking   
   to approve the CNN+ launch and for $350 million to spend on it, which he   
   got. He hired an array of expensive talent like the Fox News anchor Chris   
   Wallace and the “Desperate Housewives” star Eva Longoria.   
      
   But that $350 million didn’t show up in the CNN budget or projections and   
   wasn’t disclosed to Discovery, something AT&T’s Mr. Cook acknowledged. Mr.   
   Zucker said he had warned Mr. Kilar that the money had to be accounted for   
   and disclosed.   
      
   That issue was still unresolved in February, when Mr. Zucker acknowledged   
   that he had failed to report a consensual romantic relationship with his   
   top lieutenant, Allison Gollust. At the behest of Mr. Kilar, backed by Mr.   
   Stankey, both were forced to resign. A media firestorm ensued, with   
   renewed questions about how the AT&T executives had handled the crisis.   
   Mr. Trump seized the opportunity to call Mr. Zucker a “world-class   
   sleazebag.”   
      
   CNN+ debuted as scheduled on March 29. After a week, it had only 100,000   
   subscribers, even at a steeply discounted rate of $2.99 per month. CNBC   
   reported that fewer than 10,000 people a day were watching the streaming   
   service. Nearly 800,000 watched CNN on cable.   
      
   The end of CNN+   
   Shares in Warner Bros. Discovery began trading on April 11 with a market   
   capitalization of nearly $50 billion. Mr. Kilar and Ms. Sarnoff both   
   resigned. When Discovery executives gained access to the company’s   
   financial records after the closing (which finally reflected the $350   
   million at CNN+), it would be hard to overstate Mr. Zaslav’s dismay at   
   what AT&T had left behind.   
      
   Just 10 days later, Mr. Zaslav pulled the plug on CNN+.   
      
   It took some time longer to discover that quality control appeared to have   
   gone off the rails at the movie studio. Mr. Zaslav took the rare step of   
   canceling the much-anticipated and nearly complete “Batgirl,” which had   
   cost upward of $90 million; a Scooby-Doo sequel; and six other films   
   destined for HBO Max that Discovery managers deemed all but unwatchable.   
      
   In a recent interview, Ms. Sarnoff defended her track record at Warner.   
   She mentioned achieving “record financial results in 2021,” “breaking   
   corporate internal silos,” “fueling the growth of HBO Max” and creating   
   hits like “Ted Lasso” and “Abbott Elementary” despite a pandemic and the   
   pending spinoff of the company.   
      
   Mr. Kilar, too, praised Warner’s achievements during his tenure and said   
   he was proud of what Ms. Sarnoff and his team had accomplished.   
      
   At a conference this week, Mr. Zaslav described conditions at Warner as   
   “messier” and “much worse than we thought.”   
      
   Mr. Zaslav reversed nearly every strategic decision made by AT&T: Feature   
   films would again debut at movie theaters before moving to streaming; HBO   
   Max would not try to “crush” or outspend Netflix and Amazon; Warner would   
      
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