“Wonder Woman 1984” Helped Double HBO Max Activations, But Warner’s Revenue Dips

AT & T’s WarnerMedia saw the number of activations on its HBO Max streaming platform double in the fourth quarter to 17.2 million as of the third quarter of 2020, thanks in large part to the success of “Wonder Woman 1984”.

During its earnings call on Wednesday, AT&T said the total number of domestic HBO Max and HBO subscribers exceeded 41 million – and nearly 61 million worldwide – a 20% increase from 34.6 million in the third quarter of 2019.

The numbers, said CEO John Stankey, are coming two years ahead of schedule. AT&T invested $ 800 million in HBO Max in the fourth quarter and more than $ 2 billion in 2020. Growth in HBO Max subscribers continues to exceed original estimates, CFO John Stephens said, explaining that HBO Max and HBO had added nearly 7 million total subscribers in 2020 alone.

And the growth came in a fourth quarter in which WarnerMedia announced in December that it would release its entire line of theatrical films simultaneously on HBO Max amid the COVID-19 pandemic, including “Wonder Woman 1984. », While the company restructured and focused its strategy around streaming. In the fourth quarter, HBO’s revenue grew from $ 1.78 million in the third quarter to $ 1.9 billion, fueled largely by HBO Max subscribers.

WarnerMedia still lags behind competitors like Netflix, which recently surpassed 200 million subscribers, and Disney Plus, which captured 73.7 million. And the company’s film and television revenues have been hit by $ 1.6 billion due to the COVID-19 pandemic, which has impacted AT&T revenues at most companies, especially WarnerMedia. and national wireless service revenues.

WarnerMedia’s revenue fell 9.5% to $ 8.6 billion, and Warner Bros. fell 21% to $ 3.2 billion.

AT&T took a charge of $ 780 million related to the depreciation of production, which impacted WarnerMedia. $ 520 million of that charge resulted from the continued shutdown of theaters during the pandemic and the hybrid distribution model for its 2021 film slate.

“We have been working on the production issues related to the pandemic,” Stankey said. “And speeding up this backup has been quite an important task, and the teams have done a remarkable job of getting us back into this business.”

As AT&T separates its video business unit from its traditional broadband and voice division, it recast its entertainment group’s results, which recorded a pre-tax and non-cash depreciation of $ 15.5 billion. of dollars. The company also reported a net loss of 617,000 DirecTV and AT&T TV premium video subscribers.

But the company said subscription revenue grew 8%, with HBO Max driving organic growth. Additionally, advertising revenue jumped 7% on political advertising and news, partially offset by declines in sports. WarnerMedia’s advertising revenue grew from $ 1.07 billion in Q3 2020 to $ 1.1 billion in Q4. AT & T’s total advertising revenue, which includes Turner and the Xandr ad technology platform, has grown from $ 1.6 billion in Q3 2020 to $ 1.9 billion in Q4.

AT&T expects revenue to grow by around 1% in 2021, and Stankey has said HBO Max is the company’s “biggest bet” as it uses the platform as a base to build more customer relationships. large in an increasingly virtual environment. The company is also gearing up for the international launch of HBO Max later this year and an AVOD version of the platform expected to roll out in Q2.

AT&T broke earnings estimates by $ 0.75 per share, according to the Nasdaq. Year-over-year revenue totaled $ 171.8 billion, down from $ 181.2 billion, while AT&T posted a loss in net income of $ 13.9 million. dollars in the fourth quarter. Operating profit rose to $ 34.1 billion from $ 38.6 billion in 2019, a margin of nearly 29%.