September 25, 2019 / 6:49 PM / 25 days ago

HBO Max needs AT&T's reach to compete in streaming wars, WarnerMedia exec says

LOS ANGELES (Reuters) - The forthcoming HBO Max streaming service needs the reach of its parent company AT&T Inc (T.N) to compete in the streaming video wars, a senior WarnerMedia executive said in an interview, as the company faces pressure from an activist investor to explain its media strategy.

FILE PHOTO: HBO logo is on display during an Apple event in San Francisco, California, U.S., March 9, 2015. REUTERS/Robert Galbraith

HBO Max, scheduled to be launched next year, will combine the network’s acclaimed programming such as “Game of Thrones” with Warner Bros movies, classic TV shows including “Friends,” and original programming. The goal is to compete with companies such as Netflix Inc (NFLX.O), Walt Disney Co (DIS.N) and Apple Inc (AAPL.O) for a broad audience.

WarnerMedia will be able to market the service to the tens of millions of customers of AT&T’s wireless, DirecTV and television services and introduce them to the programming, Robert Greenblatt, chairman of WarnerMedia Entertainment and Direct-to-Consumer, said late on Tuesday.

“In this new world we live in, I think unless you can get the scale, and unless you can reach millions and millions of people, I don’t think you really have a chance,” Greenblatt said.

“We need a company of this size and scale and this enormous customer base,” Greenblatt said. “The whole thing is just a big advantage to us.”

Netflix reported nearly 152 million paid memberships as of the end of June. Apple Inc (AAPL.O) plans to offer its TV service, Apple TV+, for free for one year to anyone who buys a new Apple device, putting the programming in front of potentially 130 million or more iPhone users alone, according to Wall Street estimates.

HBO boasts 140 million subscribers globally, mostly through pay television services such as DirecTV and Comcast Corp (CMCSA.O), the company has said. At least 5 million of its subscribers are digital customers in the United States.

Greenblatt said AT&T would offer “incentives for customers that will bring them into HBO Max, hopefully right away.” He said details would be announced later.

AT&T has said it has more than 170 million direct customer relationships through TV, phone and broadband services. It also operates 5,500 retail stores.

WarnerMedia is the company previously known as Time Warner, the owner of HBO, CNN, the Warner Bros TV and movie studios, and other entertainment properties. AT&T purchased Time Warner last year.

Elliott Management Corp, which disclosed a large stake in AT&T earlier this month, has argued that AT&T has “failed to articulate a clear strategic rationale” for the purchase.

AT&T executives remain committed to a big push into entertainment under Chief Operating Officer John Stankey, Greenblatt said.

“I have nothing but 100% confidence from my management and AT&T that this is the direction to go,” he said.

“The company used to be very siloed,” he added. “Now with John Stankey running the whole show, now that we are all one company, there is an enormous amount of collaboration.”

FILE PHOTO: The company logo for AT&T is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 18, 2019. REUTERS/Brendan McDermid

HBO Max will debut in the United States. The company has plans to expand to international markets over the next few years, Greenblatt said.

WarnerMedia plans to unveil more details about its strategy at an Oct. 29 event for investors.

“You will see at that point the real depths to which this company has gone and committed to this,” Greenblatt said. “They’re really in it to win it.”

Reporting by Lisa Richwine; Editing by Kenneth Li and Lisa Shumaker

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