M+E Connections

HBO Max and AT&T TV helped give AT&T a lift in its fourth quarter (ended Dec. 31) as the streaming services helped offset the company’s premium pay TV and domestic video weakness.

The company launched HBO Max during this pandemic, John Stankey, AT&T CEO, noted Jan. 27 on an earnings call with analysts.

“About seven months later, we had more than 41 million HBO Max and HBO domestic subscribers, two years ahead of the plan we shared with you in October of 2019,” he said. That achievement was driven by the release of the movie sequel Wonder Woman 1984 on HBO Max, he said.

Total domestic HBO Max and HBO subscribers reached nearly 61 million worldwide, according to AT&T. HBO Max activations doubled since end of the third quarter, standing at 17.2 million as of the end of Q4, it said.

AT&T is “still shooting for a second quarter launch” for a lower-priced, ad-supported AVOD version of HBO Max, Stankey told analysts.

The company has yet to say how much the AVOD version will cost subscribers. The current version of HBO Max costs $14.99 a month.

“I would point out equally as important” as the AVOD version “is the Latin America launch of HBO Max that we’ve been working really hard on and will be an important driver for us on future growth, and getting ourselves embedded into the international front on a unified platform and approach to things,” Stankey said.

Therefore, “you should expect, as we get into the second quarter, there’s going to be a lot of activity and change going on here,” he added.

Changes at AT&T also include its recent decision to split the Entertainment Group into two reporting units, broadband and video, John J. Stephens, AT&T CFO, pointed out.

“HBO Max subscriber growth continues to outpace original estimates,” Stephens told analysts, adding: “We added nearly seven million total subscribers for HBO Max and HBO in 2020 alone.”

WarnerMedia “continues to be impacted by the pandemic as we’ve seen across that entire industry,” he said. But “we did see solid gains in subscription revenues, thanks to the rapid growth of HBO Max,” he said. The subscription gains on HBO Max and HBO came as “we prepare for the international launch of HBO Max later this year,” he noted.

AT&T now has “more than 10 million customers who combine one or more of our connectivity products with HBO Max or HBO,” he said.

As a result of the pandemic, the company introduced a unique one-year plan in which Warner Bros. will continue to exhibit films theatrically globally while adding an exclusive one-month access period on HBO Max, simultaneous with the film’s domestic release, he reminded analysts. “Our goal is to make the best of a very challenging situation for all involved,” he said, noting “that includes filmmakers and talent, theater owners and most importantly, the moviegoing public.”

The pandemic “impacted revenues across most businesses, particularly WarnerMedia and domestic wireless service revenues,” AT&T said in announcing Q4 results, noting declines included domestic video, Warner Bros. television and theatrical products. The company had a 617,000 net loss in premium TV.