HBO Max, AT&T’s big bet on streaming, brought in more than four million subscribers in the month following its May 27 launch, the company announced on Thursday. But overall AT&T’s quarterly profit fell 65% to $1.28 billion, or 17 cents per share.
HBO and HBO Max combined in an effort to bring the total number subscribers to 36.3 million subscribers by the end of June, John Stankey, AT&T’s CEO, told analysts on the company’s earnings call. (AT&T owns WarnerMedia, CNN’s parent company).
The combination exceeded its goal, although HBO Max may not have had as eye-popping a debut as Disney+, which brought in 10 million subscribers on day one and 50 million in roughly five months. But 4 million sign ups in the combined service’s first month puts HBO Max solidly on track for its initial projections.
AT&T said last year that the service will have 50 million subscribers in the United States by 2025.
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HBO Max was able to procure four million subscribers in a month without being offered on Roku and Amazon Fire TV — two of the most popular devices that consumers use to watch streaming services.
“We’ve tried repeatedly to make HBO Max available to all customers using Amazon Fire devices,” Stankey told analysts on Thursday. “Unfortunately, Amazon has taken an approach of treating HBO Max and its customers differently than how they’ve chosen to treat other services and their customers.”
Streaming services have seen a boost thanks to the coronavirus pandemic, which has forced millions to stay home and upended Hollywood by delaying films and shuttering theaters. For example, Warner Bros.’ “Tenet,” a thriller from Christopher Nolan, was delayed again earlier this week. It was originally supposed to open on August 12.
Stankey told investors that “theatrical still has an absolute important role moving forward,” but opened the door to allow more titles to make their way to viewers in their homes.
“I don’t know when theaters are going to reopen. Just like I’m not sure I can say I know exactly when schools are going to reopen and what the circumstances are going to be around it,” he said. “There’s no question that the longer this goes on, there’s going to be some content on the margin that we look at and say it may be better served to be distributed in another construct.”
HBO Max has an extensive content library that pulls programming from WarnerMedia’s premium cable network, HBO; the company’s nearly 100-year-old film and television studio, Warner Bros.; and cable channels including TNT, TBS, and Turner Classic Movies.
The service costs $14.99 a month, making it twice as much as Disney+ and more than Neflix’s standard plan, which costs $12.99 per month.
The bad news
The coronavirus sapped $2.8 billion in revenue from AT&T in its most recent quarter, mostly in its WarnerMedia TV and film division. Its satellite TV business, DirecTV, continued to bleed customers.
“I expect we’re going to be dealing with some of these economic challenges in the COVID environment as we move forward here,” said AT&T CEO John Stankey during a call with analysts Thursday.
WarnerMedia revenue fell 23% to $6.8 billion due to a pullback by TV advertisers, particularly as there were no live sports, and movie theaters closed.
Hollywood shut down production due to the pandemic, delaying movie releases and series for both traditional TV and streaming services. Stankey said the company hopes to resume film and TV production next month.
Overall AT&T performance
In the wireless business, AT&T’s biggest, revenues were relatively steady, slipping 1% to $17.15 billion. It lost 151,000 customers who pay a monthly cellphone bill. That number included 340,000 people that AT&T kept providing service to even though they had stopped paying because of economic difficulties due to the pandemic as part of the “Keep America Connected Pledge” many telecom companies made to the Federal Communications Commission. That agreement with the FCC ended on June 30. CFO John Stephens said the company is contacting those customers and wants to try to keep them, but didn’t specify how the pricing would work. AT&T said it also had 159,000 home internet customers who weren’t paying because of the pandemic.
Tens of millions of people in the U.S. can’t get broadband or can’t afford it, and that has only grown more difficult for them during the pandemic as work, school and social interaction have shifted online.
The company added 135,000 customers to prepaid phone service, which tends to be cheaper.
AT&T Inc. also lost 886,000 customers in its “premium” TV division, which is mostly DirecTV subscribers. That video base has shrunk by a quarter in two years.
