Last year, several reports claimed that AT&T (T 1.42%) could sell DC Comics, which it gained from its takeover of Time Warner, to appease activist investor Elliott Management's demands to streamline its business and boost its profits.

AT&T didn't divest the 85-year-old brand, which owns iconic characters like Superman, Batman, and Wonder Woman, but its recent actions suggest that some changes could occur. First, Warner Bros. abruptly fired DC Comics co-publisher Dan DiDio, who held the top position alongside Jim Lee over the past 10 years.

Shortly afterward, a few industry reports claimed that Disney's (DIS -0.36%) Marvel could either acquire DC Comics or license its characters for new comics. Lee, now serving as the company's head publisher, quickly dismissed those rumors.

However, all of these developments indicate that something is brewing at DC Comics. Could AT&T sell or kill off the storied publisher? Or will it leave the company alone and focus on more pressing issues like the launch of its new streaming services?

DC Comics' Catwoman.

Image source: DC Comics.

Diving deeper into DC Comics

DC's characters provide a lot of creative material for AT&T's WarnerMedia unit, which produces a wide range of movies and TV shows. Its eight DCEU (DC Extended Universe) films have grossed $5.5 billion globally over the past seven years. Joker, which isn't officially tethered to that universe, grossed $1.07 billion and won two Oscars.

The CW network, which WarnerMedia co-owns with ViacomCBS (NASDAQ: VIAC), hosts DC's "Arrowverse" TV shows, including Green Arrow, The Flash, Supergirl, Legends of Tomorrow, Black Lightning, and Batwoman. Those shows gave DC a stronger and more cohesive foothold in the TV market than Marvel's comparable shows on ABC, Hulu, and Netflix. DC also offers a subscription service, DC Universe, which offers digital access to its films, movies, and comics.

AT&T probably won't sell its media rights to those characters or license them to rival publishers like Marvel. However, DC Comics' publishing business, which sells print and digital comic books, is another story.

DC Comics' Flash.

Image source: DC Comics.

Sales of print comic books peaked during the speculator boom of the 1980s and early 1990s, when surging prices for rare issues attracted collectors. That bubble eventually popped, but combined sales of print and digital comics gradually stabilized in North America and grew from $805 million to $1.1 billion between 2012 and 2018, according to ICv2 and ComicChron.

However, those sales figures mask two problems. First, big distributors and brick-and-mortar comic book retailers account for a large portion of those sales. Comic book stores still struggled to attract new readers, and many of them were swept away by the retail apocalypse. Publishers like DC and Marvel tried to offset those lower unit shipments by hiking prices -- but that exacerbated the pain by alienating longtime readers.

Second, DC and Marvel's traditional superhero comics are losing ground against other categories of comic books, including graphic novels and Japanese manga. A recent NPD Group study found that sales of superhero comic books accounted for less than 10% of all comic book and graphic novel sales in the U.S. -- which indicates that the boom in comic book movies isn't boosting sales of actual comics.

How much does DC Comics matter to AT&T?

AT&T doesn't disclose DC Comics' revenue separately. Instead, it's included in the WarnerMedia segment, which also includes Turner cable networks, HBO, and Warner Bros. DC Entertainment and DC Films are subsidiaries of Warner, and DC Comics became a subsidiary of DC Entertainment in late 2009.

Warner Bros. generated $14.4 billion in revenue -- or 43% of WarnerMedia's revenue and 8% of AT&T total revenue -- last year. Within that total, Warner's "games and other" segment, which includes DC Comics, video games, and other products but excludes its TV and film properties, generated $2 billion in revenue.

Based on the aforementioned estimate of $1.1 billion in industry sales in 2018, the industry's flat growth over the past five years, and Diamond Publishing's report that DC controlled 29% of the comic book market in 2019, we can estimate that DC's publishing unit generated about $300 million in revenue last year.

That accounts for just 0.2% of AT&T's annual revenue, so it doesn't really matter if the company keeps or sells the business. Keeping the publishing unit would arguably make more sense, since it would allow AT&T to maintain firm control over the characters in print, TV, and film.

AT&T probably won't sell or license out DC Comics anytime soon

Elliott Management's moves and the dismissal of Dan DiDio sparked wild rumors, but a sale or licensing deal would arguably weaken AT&T's DC business without significantly reducing its massive long-term debt of $151 billion.

Recent reports also suggest that DiDio was fired due to creative conflicts instead of financial ones. DiDio reportedly clashed with writers over his micromanagement of storylines, and his planned "5G" reboot for the DC Universe likely exacerbated those conflicts.

Therefore, it's doubtful that AT&T will sell off or kill DC Comics anytime soon. DC won't significantly boost WarnerMedia's revenue, but its comic book storylines could still provide valuable fodder for future TV and film projects at WarnerMedia.