Activist hedge fund pressure forced AT&T to fire 42,000 workers and divest major assets

Evidence

Many of the biggest hedge funds in the world have taken sizable positions in media companies to dramatic effect. In figure 2.19, a snapshot of corporate equities in the media sector held by hedge funds at the end of each year, we see a dramatic spike in the 2010s. For example, Elliott Management, an activist hedge fund with over 50 billion in assets under management as of 2021, sued Universal Studios in 2013 over a slate of films it helped finance, purchased nearly two million shares of Comcast in 2015, and took a 3.2 billion position in AT&T in 2019. Its “activist campaign” included the release of a widely publicized letter that pushed the company to divest assets, castigated its CEO, criticized its acquisition of Time Warner and DirecTV, and demanded layoffs—sorry, my mistake, it recommended “improved operational efficiency” by “eliminating … duplicative layers,” to take advantage of a large “opportunity for rightsizing and simplification” through “workforce planning” and “strategic outsourcing.” It also demanded more dividends and share buybacks. Despite outcry from AT&T’s main labor union, the Communications Workers of America, lamenting an “archetypal ploy of vulture capitalists,” AT&T did what it was told: it fired CEO Randall Stephenson; it fired over forty-two thousand employees; it increased dividends and buybacks; it spun off Time Warner into a merger with Discovery; it spun off DirecTV and sold a 30 percent stake to the private equity fund TPG; it sold its anime service Crunchyroll to Sony, giving it a monopoly, as Sony already owned the other major anime service, Funimation; it sold prominent gossip outlet TMZ to Fox Corporation; and it sold Xandr, its advertising technology company, to Microsoft, which it would later use in its partnership with Netflix. — Andrew deWaard, Derivative Media, 146

Categorization

• XREF: Connects to the reader’s earlier work on securitization and private equity rollups — this is concrete evidence of a hedge fund imposing structural change on a media conglomerate’s asset portfolio, the upstream cause of whatever songs and shows those divested properties (Crunchyroll, TMZ) now make.
• SEED: Angle: trace what the Crunchyroll sale (Elliott pressure → Sony anime monopoly) did to the formal features of anime production and licensing — a concrete instrument-to-artifact chain.
• SHARE: The euphemism translation — ‘improved operational efficiency’ as ‘rightsizing and simplification’ — is a nerdy bit a finance-cynic friend would enjoy.