AT&T Re-Evaluating Focus on DirecTV Now

Less than three months after disclosing DirecTV Now lost 83,000 subscribers in the most-recent fiscal quarter, corporate parent AT&T appears to be re-adjusting its focus on the much-ballyhooed online TV service.

Launched in 2016, DirecTV Now ended the first quarter with about 1.5 million subscribers — many of them attracted by the service’s initial $34.99 monthly fee — a win for consumers but unsustainable to the bottom line.

Earlier this year, AT&T rolled out two new subscription plans ranging from $50 to $70 monthly. It also operates Watch Now, a mobile-only streaming service.

David Christopher

Speaking June 19 at the Bank of America/Merrill Lynch Telecom & Media Conference in London, David Christopher, president of AT&T Mobility and Entertainment, said DirecTV Now would be downsized to a “thin” service targeting the telecom’s 170 million mobile connections.

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“We have emphasized it slightly less than we did when it first launched because we are focused more on other elements of the portfolio,” Christopher said.

Those elements include a pending $15 WarnerMedia branded service with HBO and Warner Bros. central assets to the streaming platform.

“Our job is to make the media company more valuable,” Christopher said, adding that he thinks the WarnerMedia SVOD service can “get to tens of millions” of subscribers in the U.S. “in short order.”

“It’s a big opportunity for distribution. It’s a big opportunity for advertising,” Christopher said. “That SVOD product fits into our distribution product line of video very well.”

He said AT&T doesn’t currently have a standalone “SVOD product,” at a time when the executive contends a one-size-fits all approach to over-the-top video distribution isn’t working.

Indeed, with increasingly fragmented consumer segments in the media landscape, AT&T believes an SVOD service targeting aficionados of movies and premium TV shows can generate significant market share.

“Premiere content at a great value is always going to find a place [in the market],” Christopher said.

When asked about declining video subscribers, Christopher downplayed the economic impact, saying video accounts for just 7% of AT&T’s total revenue.

“You have to understand that relative weight,” he said, adding that the company is “working through” 1.6 million subscribers with two-year, loss-leader plans it believes will disappear by the end of the year.

“That’s a big relief for us,” Christopher said. “We are cleaning up our customer base.”

WarnerMedia Innovation Lab Becomes Reality with Pending 5G New York Office Construction

WarnerMedia June 17 announced the location and architecture firm for its pending WarnerMedia Innovation Lab New York headquarters — powered by parent AT&T’s upstart 5G wireless network.

The Lab, which aims to address changing consumer media habits creatively and from a marketing/advertising perspective, also announced further details on its partnerships with WarnerMedia Ad Sales and with Xandr, AT&T’s advertising and analytics company.

The 20,000 square foot facility located in the Chelsea neighborhood of Manhattan, will feature an immersive zone for showcasing consumer-ready experiences visible to the public, flexible indoor and outdoor event spaces, dedicated R&D environments and an open and collaborative modern work space.

“The Lab is more than a technology incubator, but also a dream factory for us to create the wonderment that fans have come to love and expect from WarnerMedia,” Jesse Redniss, GM, WarnerMedia Innovation Lab, said in a statement. “Here we’ll flex the best of WarnerMedia’s creative storytelling capabilities combined with cutting edge technology from AT&T and our partners to deliver experiences that will be talked about for a lifetime.”

WarnerMedia properties include Warner Bros. Studios, HBO, Turner and Otter Media.

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The Lab, which is slated to open in early 2020, will bring 5G experiences to life through exploration and development initiatives, enabling a real-time virtualized collaboration ecosystem across WarnerMedia and the AT&T offerings.

In addition to the New York-based Lab, AT&T 5G initiatives include Warner Bros. in Los Angeles in time for AT&T SHAPEThe Lounge by AT&T in Seattle and WarnerMedia’s Atlanta studios.

“By working across AT&T, we’re able to combine the latest in 5G technology with immersive content experiences and cutting-edge advertising capabilities,” said David Christopher, president of AT&T Mobility and Entertainment. “The WarnerMedia Innovation Lab will be a space where developers, creators and visitors will be inspired to push the boundaries of entertainment, all powered by the company that first introduced the U.S. to the power of mobile 5G.”

AT&T Eyes Retail Stores for Movie, TV Show Marketing

With more 2,200 standalone retail stores nationwide, AT&T has significant access points to consumers at the street level.

With the acquisition of Time Warner and creation of WarnerMedia, AT&T wants to use its retail presence as a marketing tool for Warner Bros. movies, HBO and Turner programming, John Donovan, CEO of AT&T Communications, told an investor group.

Speaking June 5 at the at the Credit Suisse Communications Broker Conference Call in New York, Donovan said the average AT&T customer visits branded stores three times a year, spending upwards of 30 minutes per visit typically focused on wireless issues.

“That retail presence … becomes a great [marketing] outlet for us to do things,” Donovan said.

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Specifically, AT&T stores gave away movie tickets to Warner Bros.’ Fantastic Beasts: The Crimes of Grindelwald, sequel to 2016’s Fantastic Beasts and Where to Find Them, and episodic insights to the final season of HBO’s “Game of Thrones.”

Donovan said he was impressed employees at AT&T stores were familiar enough with “Thrones” to share viewing information about the series.

“That drives traffic for us, provides more exposure to the media business, and you start to see these symbiotic relationships,” he said. “They’re getting very familiar with our whole portfolio, and then it just gets to be easier. It doesn’t look like you’re trying to sell or force-fit something.”

While CEO Randall Stephenson’s suggestion that AT&T stores market Warner DVDs might be wishful thinking, Donovan wants to up in-store marketing promotions to increase foot traffic and expand brand awareness.

“Content is a natural draw into the stores,” he said.

Indeed, with much of Christopher Nolan’s The Dark Knight filmed in Chicago, the AT&T Michigan Ave. store has long featured props to Warner superheroes.

Last year, the store featured the Batmobile, which Donovan said contributed to 70,000 “door swings,” up from 40,000 average door swings.

“Do you know what that’s worth to us?” he asked rhetorically. “We’re learning as a company what are these new currencies that you have and how to manage them and execute them. We’re very enthused about what WarnerMedia is going to do for the wireless business, for the TV business and so on.”

 

 

WarnerMedia Entertainment to Boycott Georgia Should Anti-Abortion Ban Become Law

WarnerMedia Entertainment May 30 joined Disney and Netflix in pledging to withdraw movie and TV show productions from Georgia should the state’s new anti-abortion law go into effect Jan. 1, 2020.

Gov. Brian Kemp May 8 signed legislation outlawing women from terminating their pregnancy six weeks after becoming pregnant. Georgia currently bans abortions after 20 weeks.

“We operate and produce work in many states and within many countries at any given time and while that doesn’t mean we agree with every position taken by a state or a country and their leaders, we do respect due process,” WarnerMedia said in a media statement. “We will watch the situation closely and if the new law holds, we will reconsider Georgia as the home of any new productions. As is always the case, we will work closely with our production partners and talent to determine where and how to shoot any given project.”

In addition to CNN and Turner in Atlanta, WarnerMedia has significant content production in Georgia, which has been home to a hotbed of film and TV production for years due to generous tax incentives.

AT&T Bringing 5G to Warner Bros. Studio Lot

Next-generation 5G mobile wireless connectivity may be more hype than reality at the moment, but that isn’t stopping AT&T from showcasing the technology next month at Warner Bros. in Los Angeles.

AT&T, which owns Warner Bros.’ operating unit WarnerMedia Entertainment, will bring a collection of 5G “experiences and demonstrations,” as well as an industry “thought leaders” to the studio for AT&T Shape, taking place June 22-23.

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AT&T will deploy 5G at the confab, which will ultimately become a permanent fixture and cover the entire Warner Bros. studio facility. Once operational, the mobile 5G connectivity will have the ability to maximize technical efficiencies and give content creators more flexibility to enhance the production experience.

“Partnering with AT&T to implement permanent 5G on the lot will allow Warner Bros. and our production partners the opportunity to explore all 5G has to offer,” Jon Gilbert, president, worldwide studio facilities, Warner Bros., said in a statement.

The interactive exhibits at Shape are designed to let attendees experience the responsiveness and speed of 5G, including the future of road-based travel in an IoT-enabled Airstream Classic travel trailer with “smart control technology” that AT&T is connecting over 5G.

Attendees will also see video gaming on 5G mobile devices, experience immersive entertainment with volumetric video and virtual reality content from Warner Bros.

“Developers, creators and media makers will see 5G technology and entertainment in new ways,” said David Christopher, president of AT&T mobility and entertainment. “By bringing 5G to Warner Bros., and other WarnerMedia properties in the future, we hope to inspire the next generation of creators to unlock the [network’s] full potential.”

AT&T CEO: WarnerMedia Looking to Partner SVOD Service With Pay-TV Operators

WarnerMedia’s pending fourth-quarter soft-launch of a branded subscription streaming video service will look to partner with — rather than antagonize — third-party pay-TV operators.

Speaking May 14 at the JPMorgan Global Technology, Media and Communications  Conference in New York, Randall Stephenson, CEO of AT&T, said the service would be centered around HBO and be included with a pay-TV subscription.

“The MVPDs, Comcast, we think are going to be an important partner to all of this,” Stephenson said. “If you’re a Comcast subscriber and you acquire HBO, you will get this [OTT video] capability with your HBO subscription on Comcast.”

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The proposed symbiotic relationship between SVOD and linear television distribution is significant considering the former was launched in part to replace pay-TV.

Indeed, Dish Network launched pioneering Sling TV in 2015 in an effort to offset declining satellite TV subscribers. AT&T followed with DirecTV Now.

Yet, online TV subscriber growth has cooled. Sling added just 7,000 subscribers in the most-recent fiscal period, and DirecTV Now lost 83,000 subs compared to a gain of 312,000 subs last year.

Stephenson said the new SVOD service is projected to generate “tens of millions of subs” — a figure dependent upon AT&T sustaining its base of DirecTV and U-verse subscribers.

The strategy is not dissimilar with Comcast, which plans to launch an OTT service free to Xfinity subscribers, with non-subscribers charged a monthly fee.

“Keeping the satellite, the U-verse customer base in check and stable is really important because it’s going to be a major distribution platform [for SVOD],” Stephenson said. “And then we want to just continue to push digital distribution on top of that as well.”

Much of that distribution will be centered around HBO, which is currently generating strong viewership through the last season of “Game of Thrones”.

Stephenson said content investment at HBO has “stepped up considerably” this year with the second seasons of “Big Little Lies” and “Succession” slated to follow “Thrones,” in addition to new series, “Chernobyl”.

“We’ve got a lot of really great content coming online as ‘Game of Thrones’ winds down,” he said.

Epix Coming to DirecTV and DirecTV Now

Epix, the premium TV network owned by MGM, and AT&T have reached a distribution agreement that will make Epix available on a subscription basis to DirecTV customers for $5.99 a month beginning May 19.

The network will also be available soon on the streaming service DirecTV Now, according to an Epix press release.

Terms of the agreement were not disclosed.

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“We are thrilled to expand our relationship with AT&T and make our growing slate of original programming and Hollywood movies accessible to viewers across the DirecTV universe,” said Michael Wright, president of Epix, in a statement. “It’s an exciting moment of growth for us as we build a brand that delivers a superior customer experience with high-powered, premium original series to a new audience on DirecTV and DirecTV Now.”

“AT&T has been a tremendous partner of ours over the years,” said Monty Sarhan, EVP and GM of Epix, in a statement. “We are extremely excited about launching on DirecTV and expanding Epix’s availability nationwide. This is an incredibly important platform for us and a truly momentous launch for our network.”

“We are pleased to add Epix to our vast content offering in the premium TV category. With its growing lineup of original programming, Epix is a great addition for our DirecTV customers,” said Dan York, senior EVP and chief content officer for AT&T, in a statement.

Epix will provide DirecTV subscribers access to the upcoming premieres of original series “Godfather of Harlem,” starring and executive produced by Forest Whitaker; “Pennyworth,” the origin story of Batman’s butler Alfred, from Warner Horizon and DC; “Perpetual Grace, LTD,” from MGM and featuring Sir Ben Kingsley; “Belgravia,” from Julian Fellowes; docu-series “Slow Burn,” based on the hit podcast;  and a weekly series, “NFL: The Grind,” from NFL Films. Epix also has original series “Get Shorty,” “Deep State,” “Elvis Goes There” and “PUNK” as well as more than 2,000 Hollywood movies.

Comcast in Talks with Disney to Sell Hulu Stake

Comcast reportedly is in talks with Disney to sell its 30% stake in Hulu, which includes online television platform Hulu with Live TV, according to CNBC, which cited internal sources.

CNBC is owned by Comcast business unit NBC Universal.

Disney currently owns 60% of the 12-year-old streaming service with 25 million subscribers after it acquired 20th Century Fox. AT&T’s WarnerMedia unit just sold its 10% stake back to Hulu for $1.43 billion.

The discussions, which CNBC said are in the preliminary stage, were revealed hours after Comcast chairman/CEO Brian Roberts told investors the cable giant enjoyed owning a large stake of a Disney asset.

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“On Hulu, the relationship with NBC, it’s very much in everybody’s interest to maintain,” Roberts said on the all. “And we have no new news today on it, other than it’s really valuable. And we’re really glad we own a large piece of it.”

At the same time, with Disney firmly in control of Hulu and Comcast heretofore reluctant to move too far away from the pay-TV business model, selling its stake in an over-the-top business could help Comcast alleviate more than $100 billion in corporate debt following the $39 billion Sky acquisition.

Comcast reportedly could get $4.5 billion for its stake in Hulu, which lost $1.5 billion in 2018. Disney doesn’t expect Hulu to become profitable until 2024 — and only after possible international expansion.

At the same time, NBC Universal CEO Steve Burke remains skeptical of OTT business model, including Netflix.

“To be worth $150 billion, someday you’ve got to make at least $10 billion in EBITDA,” Burke told CNBC last year. “There’s at least a chance Netflix never makes that.”

Comcast, which only recently incorporated direct access to Netflix for its Xfinity pay-TV subscribers, plans to launch an OTT service for Xfinity in 2020.

AT&T CFO: 27 Million People Watched ‘Game of Thrones’ Season 8 Premiere

Viewership data for the final season of HBO’s hit fantasy drama “Game of Thrones” keeps growing.

Speaking on the April 24 fiscal call, AT&T CFO John Stephens said more than 27 million watched the premiere episode of season eight across all platforms, including subscription streaming video service HBO Now.

“Those numbers will show up in the second quarter customer accounts,” Stephens said.

HBO originally said 17.4 million people watched the episode on the pay-TV channel.

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Stephens said the series helped HBO Now generate record new subscribers in the days before the premiere episode.

Meanwhile, AT&T said the $85 billion acquisition of Time Warner continues to positively affect the telecom’s bottom line.

New business unit WarnerMedia, which includes Warner Bros., HBO, Turner, AT&T’s regional sports network and Otter Media Holdings, reported first-quarter (ended March 31) operating income of more than $2.2 billion on revenue of more than $8.3 billion.

Warner Bros. saw operating income increase $164 million on revenue of $3.5 billion — the latter up from $3.2 billion in the previous-year period.

HBO saw operating income increase $32 million on revenue of $1.5 billion, down from revenue of $1.6 billion last year.

Turner saw operating income increase $82 million on revenue of $3.4 billion, down from revenue of $3.5 billion last year.

Finally, WarnerMedia confirmed an agreement with an affiliate of Related Companies to sell its office space at 30 Hudson Yards for about $2.2 billion.

The transaction is expected to close in late second-quarter 2019. AT&T will use proceeds from this transaction, along with additional planned sales of non-core assets, to reduce its $180 billion debt load following the Time Warner acquisition.

WarnerMedia earlier sold its 10% in Hulu to the Disney-controlled platform for $1.43 billion.

AT&T hopes to end fiscal 2019 with about $150 billion in debt.

AT&T Loses 544,000 Q1 Video Subs; Another 83K DirecTV Now Subs Depart

AT&T’s pay-TV and online TV businesses continue to reflect ongoing challenges as consumers migrate away from the traditional cable bundle toward an increasingly fragmented over-the-top video market.

The telecom April 24 reported it lost 544,000 pay-TV subscribers in the first quarter (ended March 31) — up 190% from a loss of 187,000 video subs during the previous-year period.

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AT&T ended the period with more than 22.3 million pay-TV subs, which includes satellite operator DirecTV and U-verse. That’s down more than 1.5 million combined subs from 2018.

Meanwhile, DirecTV Now — AT&T’s much-hyped standalone online TV service – lost 83,000 subscribers compared to a gain of 312,000 subs during the previous-year period.

The streaming service ended the period with 1.5 million subs compared to 1.46 million subs last year.

AT&T CEO Randall Stephenson attributed DirecTV Now sub losses to weaning out early subscribers paying the introductory $34.99.

‘We’ve seen the effect of that in the fourth quarter and the first quarter,” he said. “Second quarter you’ll see that moderate, and I actually believe second half of the year base of what we’re seeing in terms of uptake in the market on the new platform and the new product. We should have a decent second half of the year on DirecTV Now.”