Films to the fore in new three-tier WarnerMedia streaming service | VOD | News | Rapid TV News
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In an update on strategy and offering guidance for 2019, comms giant AT&T has offered more details on the new streaming service that it will launch after concluding its merger with Time Warner, now known as WarnerMedia.
ATT Time Warner 22 April 2017
Overall, AT&T offered guidance that in 2019 it would generate free cash flow in the range of $26 billion, end-of-year net-debt-to-adjusted-EBITDA ratio in the 2.5x range and gross capital investment in the $23 billion range.

In making the guidance, AT&T chairman and CEO Randall Stephenson said that the company was “well-positioned for success” as the lines between entertainment and communications continue to blur. He added: “If you’re 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 no longer rely exclusively on oversized bundles of content.”

Stephenson claimed that his company already had some of the world’s best content and 370 million direct-to-consumer relationships across mobility, video, broadband and digital properties.

Joining this portfolio will be the new WarnerMedia direct-to-consumer (DTC) subscription video-on-demand (SVOD) service which AT&T revealed an initial beta application is set for launch in the fourth quarter of its 2019 financial year. It added that the service will include three levels of service: an entry-level movie-focused package; a premium service with original programming and blockbuster movies; and a third service that bundles content from the first two plus a library of WarnerMedia and licensed content.

AT&T said that the SVOD service is designed to complement WarnerMedia’s existing business; benefit its current distribution partners; expand the audience and increase engagement around its content; and provide data and analytics to inform new products and better monetise content.

At its Entertainment Group which includes video and broadband businesses, AT&T said that it expected growth in broadband revenues and subscribers as it expanded its fibre network and added additional higher-ARPU fibre subscribers. It also forecast increased profitability in OTT video, following recent price increases, lower content costs and adjustments to promotions. This it said would will likely result in negative net adds at DIRECTV NOW in the fourth quarter of 2018 and in 2019.

AT&T also committed to a $1 billion improvement in linear video revenues driven by the remaining two million subscribers rolling off 2-year price locks and increased ad revenues from Xandr, AT&T’s advertising business, which grew revenues more than 20% in the third quarter of 2018. However, as the two-year price locks roll off, the company expected a decline in linear video subscribers in 2019 consistent with the pace of decline in the third quarter of 2018.