AT&T (NYSE:T) is reportedly looking to sell off its Warner Bros. Interactive Entertainment gaming segment for as much as $4 billion, according to a report by CNBC

Some of the world's biggest video game makers have thrown their hats in the ring as potential suitors. Activision Blizzard (NASDAQ:ATVI), Take-Two Interactive (NASDAQ:TTWO), and Electronic Arts (NASDAQ:EA) have all expressed interest, though no deal is assured or imminent, according to the report.

Two teens on a couch using hand controllers to play a video game.

Image source: Getty Images.

Many of the unit's video games are tied to intellectual property (IP) owned by AT&T, including Harry Potter, Game of Thrones, The Lego Movie, and the Batman: Arkham series, but also boasts other popular titles, including Mortal Kombat and the Scribblenauts series. This could complicate any potential arrangement, as it might result in a commercial licensing agreement for AT&T's IP, giving the company a cut of any future revenue.

AT&T acquired Time Warner for $85 billion in June of 2018, taking on a significant amount of debt to finance the purchase. The company's total debt has ballooned to more than $164 billion to close out the first quarter of 2020. Early last year, CFO John Stephens said the company would focus on paying down debt.  

The pressure to decrease its debt load mounted last year when activist hedge fund Elliott Management acquired a $3.2 billion stake in the company, pressuring the company to lower costs, divest non-core businesses, and pay down debt. 

The COVID-19 pandemic has been particularly challenging for debt-laden companies like AT&T, who have struggled to increase liquidity in the face of balance sheets that are already highly leveraged.