Tech

AT&T will likely be broken up and will move on from WarnerMedia, analyst Craig Moffett predicts

Key Points
  • Analyst Craig Moffett said AT&T will probably be broken up at some point in the future. 
  • "I think if you take your crystal ball and look out a little bit, it's hard to see that portfolio staying together forever," Moffett said.
  • AT&T bought Time Warner in 2018.
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Media companies that have diversified are not doing as well, says Craig Moffett

Telecom and media giant AT&T will eventually need to be split apart to separate its core business from its latest acquisitions, analyst Craig Moffett told CNBC on Thursday.

Moffett, an analyst at MoffettNathanson, said on "Squawk Box" that AT&T will eventually separate its telecom business from its media business.

"Let me be provocative for a second. I think if you take your crystal ball and look out a little bit, it's hard to see that portfolio staying together forever," Moffett said. "Somebody is going to come into AT&T eventually and — whether it's in three years, five years, whatever — they're going to have to break that company up."

In 2018, AT&T bought Time Warner, which included Warner Bros. movie studios, Turner Broadcasting and HBO. The new business group, deemed WarnerMedia, has undergone significant leadership change since the acquisition. The company plans to launch a new streaming service, HBO Max, later this year.

In addition to AT&T, Moffett said Comcast and Verizon are also being punished by investors for having media components in addition to their core telecom businesses.

"The companies that have diversified are not doing as well," Moffett said.

Comcast would be a natural fit for WarnerMedia if AT&T were to spin it off, and Comcast could potentially split into separate media and telecom companies in that scenario, Moffett said.

Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.