AT & T Launches WarnerMedia Strategy for Wall Street Analysts


AT & T will present this post-merger speech to a Wall Street analyst room this afternoon and will shed new light on the launch of its consumer direct-to-home OTT service by the end of 2019.

CEO, Randall Stephenson, ushered in the two-hour event at Time Warner Center. He took the stage of the screening room after playing a sizzling reel. The short piece culminated with a special effects of a Game of thrones dragon flying directly over the head of a young AT & T mobile phone user.

"There has been a lot going on over the past year," said Stephenson, who was referring to a nearly two-year-old (still unfinished) odyssey of Justice of President Donald Trump, who sought to block the merger of $ 81 billion Time Warner. "It has put a lot of projects on hold. … We are now in a place where we are ready and we want to share these plans with you. "

The WarnerMedia streaming service, which has not been named yet, will feature three levels, the company said. It will have an entry-level package focused on the film; premium service with original programming and blockbusters; and a third service containing the content of the first two, as well as an extensive library of WarnerMedia content and licensed. The exact prices or launch plans have yet to be revealed.

On the financial front, the company expects earnings per share growth to be below 10% in 2019, as it will absorb new content operations. It anticipates WarnerMedia's total synergies reaching $ 2.5 billion by the end of 2021. About $ 1.5 billion will be cost synergies, the remaining one billion resulting from additional sales opportunities, a reduced number of subscribers and increased advertising. The company expects to reach a growth rate of about $ 700 million by the end of 2019, reaching $ 2 billion by the end of 2020 and reaching 2, $ 5 billion by the end of 2021.

In a press release, Stephenson summarized the company's main message regarding the addition of entertainment assets to its traditional telecommunications base. "We are well positioned to succeed as the boundaries between entertainment and communications continue to fade," he said. "If you are a media company, you can no longer rely exclusively on wholesale distribution models. You must develop a direct relationship with your viewers. And if you're a communications company, you can not rely exclusively on oversized bundles of content. "

Randall Stephenson

Analysts' Day gives the company the opportunity to show itself and explain its new structure to the investment community. Wall Street has been skeptical about certain aspects of the Time Warner acquisition for several reasons. First, the deal has significantly increased the company's debt and some analysts have wondered how it will reach new heights when it is more worried about debt repayment. (According to executives, by the end of 2019, net debt will reach two and a half times adjusted earnings.)

Strategy is another point of inquiry. Many analysts and media watchers are wondering how WarnerMedia's streaming plans will be turned upside down, especially when its rival, Disney, prepares to take a new step in OTT in 2019. On the pay-TV side, the losses Subscribers at DirecTV have not been compensated by gains with DirecTV's "Skinny-Pack" service now, leaving some uncertainty about how quickly this longstanding bulwark will disappear and hurt the bottom line.

The legal status of the merger also remains murky. The DC circuit of the US Court of Appeals will hear oral arguments on December 6 as part of the government's appeal of its antitrust litigation. A federal judge of the lower court rendered a decision last June alongside AT & T, and the $ 81 billion contract was finalized in a few days.

One of the conditions of the closing is that the Turner Broadcasting unit remains muted vis-à-vis DirecTV and the other assets of the pay-TV channel, which would allow it to untie the merger if the courts finally blocked it. . Although this outcome is considered improbable, the appeal still casts a shadow on AT & T.

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