AT&T announced its earnings for the fourth quarter this morning, which includes WarnerMedia, and it took a big hit in revenue in the quarter, due to HBO Max.
WarnerMedia took a hit of $1.2 billion in revenue for the fourth quarter. And the reason for it is the fact that it is not looking to re-license its content. As it wants to save its own content for HBO Max when that launches in May. AT&T feels that a short-term loss is okay, as it figures that HBO Max will net long-term growth.
WarnerMedia wants to keep titles like Friends for HBO Max
The company is looking to offer some big titles at launch, like Friends and The Big Bang Theory. As a way to get users to sign up right away. And with the growth in different streaming services in recent years, it’s needed.
So by not licensing some of these shows for other streaming services like Netflix and Hulu, it is losing out on quite a bit of cash. But once HBO Max launches, that should be put into the rear-view.
AT&T is also planning to invest over $4 billion into HBO Max over the next few years. This would be for new content. While WarnerMedia already has a ton of content, it is going to need new content to continue to grow and keep its subscribers.
This WarnerMedia revenue loss is not what investors wants to hear
For investors, seeing WarnerMedia post a revenue loss of $1.2 billion is definitely not what you want to see, and we’re seeing that today with AT&T’s stock being down almost three-percent.
It’s not down a lot, and that’s likely because investors see this quarter as a mixed bag for AT&T. As it did do well with in other areas, but that big loss for WarnerMedia is hurting it.
HBO Max should right the ship once it launches in May. It’s going to cost subscribers $15 per month, which is the same price as HBO is now. But there’s going to be a lot more content available. A lot of WarnerMedia’s content is actually not available on HBO right now. That’s going to change with HBO Max.
Right now, HBO does a lot of licensing for movies, but that will likely change with HBO Max, since WarnerMedia also has a lot of movies under its belt. Including all of the DC movies.
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Source: ndroidheadlines.com