AT&T chief executive Randall Stephenson said Tuesday that the company will pull popular TV shows and movies from streaming rivals and “bring that content back into the fold” as it launches its own Netflix-like video service.
AT&T “will be bringing a lot of these media rights, licensing rights back to ourselves to put on our own SVOD (subscription video-on-demand) product,” Stephenson said Tuesday morning at the JPMorgan Global Technology, Media and Communications Conference in Boston.AT&T’s new subscription video service is expected to launch in late 2019. It will be anchored by HBO TV shows and movies, along with content from Warner Bros. studios and Turner Networks. AT&T became the owner of the valuable entertainment library last June when it bought Time Warner in a deal valued at about $108.7 billion, including debt.Warner Bros. extensive library of hit shows includes Friends, Seinfeld and The Big Bang Theory, Stephenson said, and AT&T entertainment arm WarnerMedia spends about $14 billion a year to create new original content.”What you’ll see happen over time is a lot more and more of that $14 billion will be directed toward our own product — content to be put on our own product,” he said.
AT&T, the largest pay-TV company in the country, is facing headwinds as it tries to grow its entertainment business. It has been losing hundreds of thousands of cable and satellite TV customers quarter after quarter — and more than half a million in just the first three months of this year. It is under pressure from companies born in the internet-age, such as Netflix and Hulu. And it will soon have another challenger: Disney is launching its own streaming service, Disney+, in mid-November.
In his remarks Tuesday, Stephenson said the Dallas-based legacy telecom’s entertainment strategy began about a decade ago when AT&T began buying airwaves and building out its wireless network to support the growing popularity of mobile video. Since then, he said, it’s made strategic decisions based on that vision, from launching live TV streaming service DirecTV Now to buying Time Warner (now called WarnerMedia) and starting a new targeted advertising business called Xandr.
To stand out in the ultra-competitive streaming world, Stephenson said AT&T must invest significantly in original content and be the only video platform that carries some of the unique TV and movie content that it owns. “We’re going to have to step up our investment,” he said. “We’re also going to have to, as I mentioned, to take a lot of the great content that we own that’s been licensed elsewhere and begin to bring that content back into the fold.”He said he expects AT&T’s new subscription video service to attract “tens of millions of subscribers.””This will become a significant driver of our growth over the next few years,” he said.AT&T has not announced the price of the new video service. Disney+, which launches Nov. 12, will be $7 a month. Netflix’s most popular plan recently increased from $11 to $13 a month.AT&T would not be the first company to use exclusive content or end licensing deals to attract eyeballs. Netflix and Amazon Prime have poured money into making original shows. AT&T-owned HBO has seen the benefits of exclusive content firsthand with the success of Game of Thrones. And Disney is ending lucrative content agreements with Netflix ahead of the launch of Disney+.
Stephenson’s remarks also affirm some of the concerns raised during the Justice Department’s failed court battle to block the AT&T-Time Warner deal. During testimony, the government’s attorneys and executives from rival entertainment companies said AT&T’s ownership of Time Warner content would give it too much power and allow it to block rivals from getting “must have” content that they need to compete.Disney also said on Tuesday that it is taking full control of streaming service Hulu from Comcast. Hulu today sells packages containing network TV episodes and original series as well as a newer, cable-like service with live TV channels.Having total control of Hulu gives Disney more power to support its own streaming efforts. The company is launching a new kids-focused streaming service called Disney Plus this year for $7 a month and is likely to offer discounted bundles with Hulu and its sports service, ESPN Plus.An aftereffect of all these new services could be the fragmentation of content that might require viewers to pay for more streaming services.Disney is planning to take back its library, which includes Pixar, Marvel and Star Wars movies, from Netflix for its own services. If entertainment companies pull shows from Hulu, Netflix or Amazon, however, they miss out on lucrative licensing revenue — a hard decision to make when their own fledging services have to compete with so many others.”I’m not firmly convinced that everyone going to pull all their content off Netflix and put it behind their walled garden,” said Brett Sappington, analyst for research firm Parks Associates.The Associated Press contributed to this story.