AT&T (NYSE.T) had been ripping out entire chapters of the Netflix (NASDAQ.NFLX) playbook for a few years. The grand digital media experiment of the telecom giant has mostly ended, which highlights some fundamental differences between them. Which stock is the best investment?Let's take a look.What Ma Bell is doing wrongAT&T paid $49Billion for DirecTV and $110B for Time Warner in 2015. AT&T wanted to create a media empire based on a backbone network of digital data networks. It also purchased Time Warner for $110 billion in 2018.Randall Stephenson, CEO of AT&T, stated that his company would bring a new approach to the media and entertainment sector for consumers, content creators and distributors.However, it didn't work out as planned. Ma Bell was unable to create a telecom-plus media combination that is greater than the sum its parts. AT&T's premium TV services collection had 22.4 million subscribers as of spring 2019. According to the latest earnings report, 15.9 million subscribers were left. This was a bad sign considering that Netflix and other media-streaming companies reported huge subscriber growth during the same period.AT&T is now throwing in the towel. AT&T is currently in the process to spin off DirecTV as well as the Time Warner content-producing arm. AT&T's fiber-optic U-Verse service bundles satellite broadcasting to make it a separate business. WarnerMedia has joined forces with Discovery (NASDAQ.DISCA) (NASDAQ.DISCK). AT&T will be able to pocket $50 billion after the spin-offs are completed -- a small return on an investment of almost $160 billion.It is a significant strategy shift to give up media operations. AT&T will increase its traditional telecom business, which includes selling services on wired or wireless networks. It's the end for AT&T's lucrative growth plans and a return back to the slow grind selling commodity services. Analysts predict that Ma Bell's bottom line earnings will grow by just 1.4% annually over the next five year. This is not what I like.What Netflix is doing rightNetflix is now showing the world how to be a successful showbusiness company.This is the largest player in the global media streaming market. It should experience rapid growth over the next several years. Netflix is also a major producer of high-quality content, dominating award shows like the Emmys and Golden Globes.This is the secret to Netflix's remarkable subscriber growth. Netflix spent years developing and perfecting a digital media delivery platform that is free from distracting ads or links to Hollywood's traditional studio system. If you can build a great service and make it affordable, success will follow.Randall Stephenson should have looked at Netflix if he really wanted to see "a fresh approach to how media and entertainment works." AT&T instead resorted back to its old tricks in the face of a changing business environment. AT&T raised prices to protect its bottom line when DirecTV and U-Verse lost subscribers. This move may have actually accelerated the exodus from video-service customers. The average revenue per user (ARPU), fell by 29% in the past two years.Netflix doesn't just follow the tried-and-true business practices of past eras. This company continues to throw curveballs at established media industries.It is easy to make the right choice.Either you can invest in a streaming media company that is growing quickly and focuses on quality products, or you can go with an old guard member with low growth prospects. While Netflix is leading the charge to a new era, AT&T is trying too hard to preserve outdated business ideas.
