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AT&T's WarnerMedia Ramps Up Content Spending for HBO Max, at Expense of Cable

WarnerMedia, subsidiary of telecom giant AT&T (NYSE: T), is commissioning more entertainment content for the upcoming launch of streaming service HBO Max, and spending less on programming for its conventional cable channels, according to a new report from Ampere Analytics.

The report suggests during the final quarter of 2019, WarnerMedia commissioned 46 projects intended for use with HBO Max or other streaming venues, versus only 17 projects intended for use on one of its cable television channels such as TNT, TBS, or truTV. During the same quarter a year earlier, WarnerMedia ordered 27 programs or movies for cable viewing, and only two for streaming platforms. Ampere did not mention specific dollar amounts allocated to these video entertainment projects.

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Although slow to start, the video streaming market has seen a surge of new providers entering the space within the past year. Walt Disney launched Disney+ in November to take on Netflix, while Comcast says it will launch its streaming service early this year. ViacomCBS reported early this month it too would bring a wide-appeal stand-alone streaming service to the market in the foreseeable future. AT&T already offers streaming options in addition to traditional cable television, with AT&T TV Now and HBO Now, but HBO Max is expected to be the centerpiece of its streaming services.

The ramped-up focus may reflect a strategic decision from WarnerMedia. At a planned price of $14.99 per month HBO Max costs more than most other similar streaming services, some of which will be free, fully supported by advertising. More and better video content could differentiate the offering to consumers who now have alternatives, justifying the higher price.

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James Brumley owns shares of AT&T. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool recommends Comcast and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.


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