AT&T (NYSE: T) and an investment firm run by former News Corp. executive Peter Chernin have formed an online video venture that could rival Netflix and Hulu.
AT&T and Chernin Group said Tuesday that they have committed more than $500 million in funding toward the venture. They are not saying how much each company is investing.
“AT&T and The Chernin Group are combining our skill sets to address the growing consumer demand for accessing content how and when they want it,” said John Stankey, chief strategy officer at AT&T, in a statement.
“Combining our expertise in network infrastructure, mobile, broadband and video with The Chernin Group’s management and expertise in content, distribution, and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space.”
The move comes amid rapid growth in online video services. AT&T, a telecoms giant, already offers TV content through its U-Verse service, which competes with more traditional cable TV providers. With online video, though, it could attract customers of Netflix, Hulu, YouTube and other services – including people who’ve stopped paying for traditional broadcast, cable or satellite TV.
AT&T also has targeted the Research Triangle and other metro areas in North Carolina for possible gigabit Internet services.
The companies said the venture will invest in advertising and subscription-based video-on-demand services, as well as online streaming.
“A critical part of The Chernin Group’s strategy has been our significant focus on the online video industry, and joining forces with AT&T only further underscores our strategic commitment in this area as operators, investors and programmers,” Chernin said. “The Chernin Group. “Consumers are increasingly viewing video content on their phones, tablets, computers, game consoles and connected TVs on mobile and broadband networks. AT&T’s massive reach on those platforms across mobile and broadband and their commitment to the online video space make them the perfect fit for this venture with us.”
AT&T rival Verizon Communications Inc. is planning similar services. The telecommunications giant bought Intel Media earlier this year. The onetime division of chip maker Intel Corp. had been preparing to launch a service that streams TV channels over the Internet.
Dish Network Corp., meanwhile, struck a deal with Disney last month that paves the way for the satellite TV service to live-stream Disney-owned channels like ESPN and ABC over the Internet to customers’ smartphones, tablets, video game consoles and other devices.
None of companies have announced start dates for the planned online video services.
The Chernin Group, run by former News Corp. Chief Operating Officer Peter Chernin, is contributing its assets to the venture, including its majority stake in Crunchyroll, a subscription-based provider of anime videos.
Shares of Dallas-based AT&T rose 23 cents to $36.29 in late morning trading.
