AT&T has announced that content spending and foregone content licensing revenue on WarnerMedia’s upcoming streaming service HBO Max has impacted revenues and operating income in the fourth quarter of 2019.
AT&T reported in its quarterly earnings that its WarnerMedia division lost $1.2 billion in revenue due to investment in HBO Max, preparing the service for launch this May.
Specifically, those losses are attributed to “HBO Max investments in the form of foregone WarnerMedia content licensing revenues” – in other words they are losing revenue by not licensing out their content and keeping it for the service.
AT&T is planning to invest around $4 billion over the next few years into Max, including ordering an array of original series on both traditional HBO and HBO Max in order to compete with streaming services like Netflix, Disney+, and Apple TV+.
HBO Max is set to be the ‘workhorse’ for AT&T and WarnerMedia’s video divisions, the company is betting big on cord-cutting. As a result, both TNT and TBS will reportedly shift to more unscripted programming as linear networks suffer in the ratings, losing ground to streaming. Instead, focus on those will shift to news, sports and reality series which is where cable and linear TV still shines.
Apple also reported its quarterly earnings today with Q4 2019 the company’s biggest ever in terms of revenue and earnings – up to $91.82 billion this year. Of the Apple TV+ service, the only statement given indicate its revenue ‘was immaterial to our results’ for the quarter. However, over time the company expects it to “start contributing to the growth of the services business”.