How Do You Hide a Debt Crisis from Shareholders?

It’s interesting how different aspects of geekdom’s failure to interact can lead to people grabbing into smaller parts of a larger, more interesting picture. (Note – this started as a series of tweets that I’ve tweaked somewhat)

Take, for example, the massive layoffs at DC Comics. Now, the response to this from a *lot* of people, including people in the comics industry was that oh, this is because of stagnation due to the current comics model, and this had caused DC to become less profitable. Nvm Marvel also doing the same thing, but no layoffs yet.

DC is owned by Warner Brothers who is owned by AT&T. I bring that up because if you go over to the video game space you see AT&T has been trying to sell Warner Interactive for the past few months. Then over in the anime sector, you have AT&T now also trying to sell off Crunchyroll. And finally, in the telecommunications sector, there’s rumors AT&T will need to sell off DirecTV. However, there are less conclusive news stories on that front that implies that they’re trying to sell that one yet.

Now, if you take all of that, and add the information that AT&T is really heavily leveraged with debt. Which means that if you put all of these together, and look at the larger picture – DC Comics getting gutted has nothing to do with the company’s actual performance as a comics company. What appears to be actually going on is that AT&T is desperately trying to reduce their debt load – and they’re trying to do so by slashing staff and selling companies in ways that won’t attract negative attention from investors.

Selling DC means Selling Superman, which will absolutely attract investor attention because everyone will end up covering, and could lead to panicked investors. After all, you don’t sell off of one of the five most recognizable characters in the world unless someone is desperately wrong. Firing everyone who is writing Superman in the comics, on the other hand, will completely slip under the radar because investors don’t care who is writing Superman, just who owns him.

Same with selling your video game studio – most investors only pay attention to video game companies when the companies themselves are publically traded. So, they’ll pay attention to investment news related to Epic, Activision-Blizzard, EA, etc. However, with Microsoft, the Xbox line doesn’t get the same degree of attention from investors that their cloud and OS businesses do.

Same with an anime streaming brand – anime doesn’t get nominated for major awards, so investors aren’t paying attention. Most investors don’t know that Sony owns Aniplex and Funimation – even ones who own shares in Sony. Until recently, most Hasbro shareholders probably didn’t know or care that Hasbro owned Wizards of the Coast – and in turn Magic the Gathering and Dungeons & Dragons. Consequently, if AT&T tries to sell Crunchyroll, and asks for a really high price for it, investors aren’t going to care that AT&T is trying to raise a bunch of quick cash by selling off a, by all accounts profitable, revenue stream.

In other words – what isn’t killing DC Comics isn’t that the comic model they’re using is unsustainable. What’s killing DC Comics is the same thing that killed Toys R’ Us in the US.