AT&T’s failed media and entertainment adventures continue to hang like a dark cloud over the company despite its newfound status as a standalone company squarely focused on wireless and broadband connectivity. As the company finalizes a shedding of its WarnerMedia business through a merger with Discovery this month, following last year’s DirecTV spin-off, its outlook remains poor, according to a market research firm.

“Breaking AT&T apart doesn’t undo the damage that was done by overpaying for DirecTV and then doubling down on Time Warner,” Craig Moffett, partner and senior analyst at MoffettNathanson wrote in a research note.

AT&T acquired DirecTV for $67 billion in 2015, and finalized a deal to acquire Time Warner for $85 billion in 2018. The company unraveled itself from both companies surprisingly quickly, but the financial ramifications of those deals will linger for years. 

A misguided strategy to become a juggernaut in both connectivity and entertainment burdened the company with a mountain of debt and “left AT&T’s core business weaker for having spent several critical years with management’s attention focused elsewhere,” Moffett wrote.

AT&T slipped to No. 3 in the domestic wireless market during that period, and that status could remain unchanged through the 5G era. 

T-Mobile US and Verizon have deployed significantly larger 5G networks than AT&T thus far, and there’s nothing in AT&T’s plans to indicate it will catch up before most of the country is blanketed with 5G coverage by its rivals. AT&T's 5G spectrum holdings in the all-important mid band also lag behind its competitors. 

“AT&T is to be commended for making the hard decision to re-focus on their core business,” Moffett wrote. However, the damage caused by AT&T’s combined $153 billion foray into satellite TV and entertainment can’t be undone with the stroke of a pen, he added. 

The company has “neither a credible growth story nor a discernible competitive advantage in any of their business segments,” Moffett wrote. “And so ends a long and ugly chapter in the storied history of a great American company. Investors gave a resounding thumbs down to AT&T’s misadventure in media, and rightly so. It was born of a flawed strategy, and it was poorly executed.”