AT&T: How Southwestern Bell Swallowed Its Parent and Bought Time Warner

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Alexander Graham Bell patented the telephone in 1876, but businessman Theodore Vail built the empire, creating the long-distance subsidiary American Telephone and Telegraph in 1885 and buying up local operators. Facing antitrust action in 1913, AT&T accepted the Kingsbury Commitment, letting independents connect to its network in exchange for a regulated monopoly. By the 1930s, Ma Bell held over 80 percent of the U.S. phone market. A 1974 Justice Department suit led to the settlement that took effect in 1984: AT&T kept long distance and Bell Labs, and its local networks became seven Baby Bells.

The smallest, Southwestern Bell Corporation, used the Telecommunications Act of 1996 to rebuild. Under Edward Whitacre, SBC bought Pacific Telesis in 1997 and Ameritech in 1999, then paid $16 billion in 2005 for the struggling original AT&T and took its name and ticker. BellSouth followed a year later, reuniting four of the seven Baby Bells. The new AT&T then paid $48.5 billion for DirecTV in 2015 and over $108 billion for Time Warner in 2018, surviving a Justice Department suit, before about $200 billion in debt forced it to spin both off by 2021 under CEO John Stankey.

• WarnerMedia was spun off to merge with Discovery, and AT&T returned to 5G and fiber, including Lumen Technologies' mass market fiber business.
• A 2024 breach of AT&T's Snowflake workspace exposed call and text logs for nearly all of its cellular customers over six months.
• The China-linked Salt Typhoon campaign targeted the wiretap systems broadband providers keep for law enforcement.
• After the 2016 election, AT&T paid $600,000 to Michael Cohen through a shell company for insight on the Time Warner merger and other policy issues.
• Court records show AT&T gave One America News Network early financial backing and distribution on DirecTV.