AT&T: HBO Max/HBO Aims for Up to 150 million Subs by 2025; AVOD Service Coming in June

On AT&T’s March 12 investor day event, the telecom issued updated subscriber metrics for its HBO and HBO Max properties. The company, which operates WarnerMedia, parent to Warner Bros. Pictures, HBO and Turner, says it now expects between 120 million to 150 million HBO Max/HBO subscribers by 2025 — up from the 75 million to 90 million projected in October 2019.

Heady numbers considering Max generated just 4 million subscribers after launching on May 27, 2020 — a tally that doubled to 8.6 million last October. AT&T then combined Max subs with premium channel HBO to realize 41.5 million combined U.S. subscribers at the end of 2020, compared with 38 million at the end of September.

HBO Max international expansion and AVOD launch are slated for June. AT&T expects to launch Max in 60 markets outside the U.S. this year (39 territories in Latin America and the Caribbean in late June and 21 territories in Europe in the second half of 2021). Those markets do not include the U.K., Germany, Italy and Australia due to existing content distribution agreements with HBO. Also in June, the company expects to launch in the U.S. market an advertising-supported (AVOD) version of HBO Max.

“It’s going to be a very big year for HBO Max across the globe,” WarnerMedia CEO Jason Kilar said on the March 12 AT&T investor day event. He said rollout of the AVOD version of Max  in June would help change the platform’s consumer dynamics. Max AVOD already has $81 million in upfront commitments from advertisers, according to the company.

“Ad-supported [VOD], when executed thoughtfully and elegantly, is a powerful way to lower prices for everyone,” Kilar said. “We’ll be doing just that in June, here in the U.S.”

Max is expected to double revenue to $15 billion in the next five years. “We expect to break even by 2025,” he said.

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Separately, AT&T, which ballooned its corporate debt past $170 billion with the acquisition of Time Warner in 2016, has been trying to lower its debt-to-earnings to more manageable level ever since. However, the company now expects to end 2021 with a net debt-to-adjusted EBITDA ratio of about 3.0, reflecting an anticipated increase in net debt of about $6 billion to fund the C-band spectrum purchases.

During 2024, AT&T expects to reach a net debt-to-adjusted EBITDA ratio of 2.5 times or lower. To achieve, the telecom expects to use all cash flows after total dividends to pay down debt and will continue to look for opportunities to monetize non-strategic assets. The company also does not plan to repurchase shares during this period.

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