AT&T details its streaming service plans as it weighs a sale of its Hulu stake

AT&T may be ready to sell its stake in Hulu, the company revealed in an analyst presentation on Thursday. The company currently owns a 10 percent stake in the service by way of WarnerMedia, as a result of its Time Warner acquisition. But AT&T today is running its own streaming services, including live TV service DirecTV Now aimed at cord cutters, and a more lightweight WatchTV. It’s also preparing to launch yet another direct-to-consumer streaming service in 2019 that leverages its WarnerMedia properties.

The company offered a few more details about this new service during the presentation, noting that it will have three tiers of service.

The entry-level package will be focused on movies, followed by a premium service with original programming and “blockbuster movies.” The third service will include content from the first two tiers, then add an “extensive library of WarnerMedia and licensed content,” including classics, kids & family programing, comedy, and other theatrical releases and niche content.

The service will launch into beta in Q4 2019, AT&T said, and will complement WarnerMedia’s existing business. It will also work across devices, and will expand over time to include third-party content through partnerships.

As for selling its stake in Hulu, the company is “looking for opportunities to monetize assets” that are not essential to its current strategies, explained AT&T CFO John Stephens. He said the company was looking at its “minority investments in things like Sky México or Hulu or a variety of other things.”

The mention of the Hulu sale was a part of a larger discussion about paying down $18 billion of AT&T’s $20 billion in debt by the end of next year, which involved raising up $8 billion in cash by the sale of some assets. The Hulu stake could be worth up to $930 million, Variety notes.

Also of note was the company’s not-so-vague threat that WarnerMedia would not be renewing its licensing deals with rival streaming services when their rights expire.

Asked how the new direct-to-consumer effort will be able to compete with incumbents, WarnerMedia CEO John Stankey responded that over the next 18 to 24 months, “we’re going to see a pretty substantial structural shift that’s going to occur…some of the incumbents in that are in that space today should expect that their libraries are going to get a lot thinner,” he said.

“75 to 80 percent of their total viewing tonnage is sitting on a lot of that licensed content. So their pressure is they’ve got to make this pivot over the next 18 to 24 months to get people off of viewing the licensed content that maybe sits in our library or sits in a Disney/Fox library, and get it onto their own,” Stankey added.

The company believes that, over time, it will be able to bring in enough new subscribers to its streaming offers to offset the declines related to cord cutting, which is impacting its satellite TV company DirectTV. In Q3 2019, the company lost 359,000 net DirecTV subscribers as more consumers dropped pay TV in favor of streaming services, like Netflix.

 

The largest software acquisition ever: IBM to buy Red Hat for $34B

At a price typically reserved for semiconductor companies, telecoms, and pharmaceutical giants, IBM announced today it would pay a record $34 billion in cash and debt to acquire enterprise open source provider Red Hat. Eclipsing Microsoft’s $26.2 billion acquisition of LinkedIn, this is the biggest software acquisition in history. It’s not the biggest tech acquisition ever, though, as that title belongs to Dell’s $67 billion buyout of data storage business EMC.

You can learn about what IBM is buying Red Hat to become a hybrid cloud company in TechCrunch editor Ingrid Lunden’s deep dive here:

So how does the IBM-Red Hat deal (if it closes), stack up against the other largest acquisitions of all time?

Top Tech Acquisitions

  1. $67 billion – Personal computer company Dell buys EMC data storage
  2. $37 billion – Semiconductor company Avago Technologies semiconductors buys and renames as semiconductor giant Broadcom
  3. $34 billion (pending) – IBM computers buys open source software provider Red Hat
  4. $31.4 billion – Japanese conglomerate SoftBank acquires semiconductor company ARM Holdings
  5. $26.2 billion – Software company Microsoft buys professional social network Linkedin in 2016

Top Software Acquisitions

  1. $34 billion (pending) – IBM computers buys open source software provider Red Hat in 2018
  2. $26.2 billion – Software company Microsoft buys professional social network LinkedIn in 2016
  3. $22 billion – Social network Facebook buys messaging app WhatsApp in 2014
  4. $13.5 billion – Security software maker Symantec buys storage management software maker Veritas in 2004 ($18 billion adjusted for inflation)
  5.  $11 billion – Database company Oracle buys human resources software company PeopleSoft in 2004 ($14.7 billion adjusted for inflation)

Top Acquisitions Ever

  1. $202 billion – British telecom Vodafone buys German telecom Mannesmann in 2000 ($296 billion adjusted for inflation)
  2. $165 billion – ISP AOL buys media conglomerate Time Warner in 200 ($241 billion adjusted for inflation)
  3. $111.8 billion – Pharmaceutical giant Pfizer buys pharmaceutical company Warner Lambert in 1999 ($164 billion adjusted for inflation)
  4. $130 billion – Telecom Verizon Communications buys Vodafone and Bell Atlantic’s Verizon Wireless in 2013
  5. $130 billion – Dow Chemical buys chemical company DuPont in 2015

AT&T and WarnerMedia Announce Closure of Classic Movie Streaming Service ‘FilmStruck’

It’s now been just over four months since AT&T completed its acquisition of Time Warner, and today AT&T has made a move to streamline WarnerMedia assets with the discontinuation of classic film streaming service FilmStruck. The service is now warning visitors to its website that it will be shutting down on November 29, 2018, and as of today is no longer enrolling new subscribers (via Variety).

FilmStruck was available on iOS and tvOS, but it appears that the app has been removed from both App Stores. On iOS, a search for “FilmStruck” guides users to TCM’s new streaming app Watch TCM.



All current FilmStruck subscribers will receive an email with more details, including potential refunds, and the company put together a list of FAQs for more information. FilmStruck will remain in operation for the next month, and in a tweet the company said, “It has been our pleasure bringing FilmStruck to you and we thank you for your support.”

FilmStruck debuted in November 2016, offering a lineup of nearly 2,000 classic, indie, foreign, and cult films, as well as acting as the streaming home to the Criterion Collection. Subscribers paid $6.99/month for the service, or $10.99/month for the service with access to the Criterion Collection. Films available on FilmStruck include the original “A Star is Born”, “Casablanca”, “The Music Man,” and many more.

According to a statement provided by Turner and WB Digital Networks, FilmStruck remained a niche service for its entire lifetime, leading to the discontinuation.

“We’re incredibly proud of the creativity and innovations produced by the talented and dedicated teams who worked on FilmStruck over the past two years. While FilmStruck has a very loyal fanbase, it remains largely a niche service. We plan to take key learnings from FilmStruck to help shape future business decisions in the direct-to-consumer space and redirect this investment back into our collective portfolios.”

A few other WarnerMedia digital services have been shut down following the AT&T acquisition, including the Korean drama-focused DramaFever and digital content TV studio Super Deluxe. According to a source familiar with AT&T’s strategy, “They felt Time Warner overall had too many initiatives,” leading to the pruning of services that lack broad appeal.

Turner Classic Movies offers an alternative for Apple TV owners with the recently launched “Watch TCM” tvOS app. Unlike FilmStruck’s separate monthly streaming service cost, Watch TCM is an app that users can connect to their cable subscriptions to watch “nearly every title playing on TCM.”

Before FilmStruck goes away for good, the Criterion Collection promises that it will keep subscribers informed about the programming they can watch on the service before it shuts down in late November. Looking forward, the company will be trying to find ways to “bring our library and original content back to the digital space as soon as possible.”

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AT&T’s WarnerMedia to Launch New Streaming Service in Fourth Quarter of 2019

AT&T’s WarnerMedia is working on its own streaming service to compete with Netflix, Hulu, Disney, and others, the company announced today.

According to AT&T, the upcoming streaming service is “another benefit” of the merger between AT&T and Time Warner. AT&T says it is committed to launching a “compelling and competitive product” that helps the company expand its reach.



AT&T’s streaming service will include the WarnerMedia collection of films, television series, animation, documentaries, and more. The plan is to “create such a compelling product” that it will help distributors increase customer penetration and help AT&T reach additional customers.

AT&T already owns DirecTV and offers live streaming content through DirecTV Now, HBO Go, and HBO Now.

At the Vanity Fair New Establishment Summit on Wednesday, WarnerMedia CEO John Stankey said that HBO will be a “lead brand” in the new service. From CNBC:

“Around HBO will come a great library of additional content from not only the WarnerMedia properties but also some selective third party licensed content,” Stankey said. “And the driver behind this is really straight forward. We know there’s customers who love to engage with our content — we’ve got a great history of building it — much of which they can’t get in one place.”

Along with HBO, the service will include content from Turner and Warner Bros.

According to Stankey, the new streaming service will feature a “compelling price point” when it launches in the fourth quarter of 2019.

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FCC says court made error in approval of AT&T/Time Warner merger

The Department of Justice’s attempt to reverse the AT&T/Time Warner merger received some help yesterday from an unexpected source: the Federal Communications Commission.

The FCC previously allowed AT&T to buy Time Warner without having to undergo a lengthy public-interest review, despite pushback from Democrats in the Senate and FCC. The DOJ fought the merger alone, ultimately losing a court ruling that allowed AT&T to complete the acquisition.

But the DOJ appealed that court ruling last month, and yesterday the FCC gave the DOJ’s case a small boost. The FCC isn’t actually supporting the DOJ’s case, but the commission’s filing points out an error made by the US District Court for the District of Columbia. In US District Judge Richard Leon’s ruling against the DOJ, he said that he was “hesitant to assign any significant evidentiary value” to previous statements that AT&T and the AT&T-owned DirecTV made to the FCC. AT&T’s own statements to the FCC, made in the years prior to the AT&T/Time Warner merger, supported the DOJ’s case that a merged entity could raise the price of programming. Those AT&T statements were made as part of the FCC’s 2010 review of the Comcast/NBCUniversal merger and in other FCC proceedings.

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U.S. DoJ Says Ruling Approving AT&T-Time Warner Merger Ignored ‘Fundamental Principles of Economics and Common Sense’

The U.S. Department of Justice today filed an appeal with the District of Columbia Appeals Court protesting the June ruling that allowed the merger between AT&T and Time Warner to move forward, reports The Washington Post.

In the filing, the DoJ says the district court approved the merger after “erroneously ignoring fundamental principles of economics and common sense” and that it used a “deeply flawed assessment of the government’s evidence” to reach its decision.



According to the DoJ, AT&T’s access to Time Warner’s content, including the highly important Turner Broadcasting System, which includes CNN, Cartoon Network, TBS, TNT, and other networks, gives it bargaining leverage over rivals, which could drive up access fees, ultimately resulting in higher prices for consumers.

The original ruling approving the merger, says the DoJ, ignored key documents from AT&T on the competitive harm of vertical mergers, limited expert economic testimony, and refused to close the courtroom to allow for testimony related to confidential business information. Further, the DoJ insists the original ruling ignored the economics of bargaining and did not consider corporate profit maximization.

The government established a reasonable probability that the AT&T-Time Warner merger would increase Time Warner’s bargaining leverage and, thus, substantially lessen competition, in violation of Section 7 of the Clayton Act.

The district court’s contrary conclusion rests on two fundamental analytical errors: it discarded the economics of bargaining, and it failed to apply the foundational principle of corporate-wide profit maximization. These errors colored the court’s view of the facts, leading to a decision that is clearly erroneous in light of the evidence presented at trial.

The Department of Justice is asking the appeals court to vacate the district court’s ruling and remand the matter for further proceedings.

AT&T and Time Warner completed their merger in June following the judge’s ruling that the merger was legal. The Justice Department said at the time that it was disappointed in the court’s ruling and would consider its next steps, but allowed the merger to move forward and did not file an emergency stay.

While the merger is finished, the Department of Justice remains able to appeal the judge’s ruling and first announced plans to do so back in mid-July.

Shortly after acquiring Time Warner, AT&T announced a new WatchTV service allowing AT&T wireless subscribers with new “AT&T Unlimited &More” and “AT&T Unlimited &More Premium” plans access to more than 30 live channels and 15,000 TV shows and movies on demand.

AT&T’s plans are more expensive than previous unlimited wireless plans, but they include WatchTV, which AT&T charges $15 per month for on a standalone basis.

Though AT&T said that its prices would not increase following the merger, it raised prices on its DirecTV Now plans by $5. AT&T also recently raised its administrative fees for postpaid wireless subscribers to $1.99, which some analysts have speculated is to make up for the expense of the Time Warner purchase.

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The Department of Justice isn’t done fighting the AT&T-Time Warner merger

The U.S. Department of Justice has filed to appeal a federal judge’s decision to approve AT&T’s acquisition of Time Warner.

Back when he was campaigning for the presidency, Donald Trump said his administration would block the deal, and indeed, the DOJ sued to stop the merger, arguing it would hurt competition.

Last month, however, U.S. District Court Judge Richard J. Leon ruled that the deal could move forward without conditions. He said from the bench, “The court has now spoken. … The defendants have won” — and the deal closed later that week.

In fact, we’re already starting to see some of the fallout, with AT&T’s reported plans for Time Warner-owned HBO leading to a flurry of worried headlines in just the past couple days.

The deal also seemed to set the stage for even more consolidation between telecom and media companies, leading Comcast to challenge Disney for ownership of Fox’s film and TV assets. (TechCrunch was already a very small part of this trend, since we’re owned by Verizon.)

“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned,” said AT&T General Counsel David McAtee in a statement. “While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DOJ has chosen to do so under these circumstances. We are ready to defend the Court’s decision at the D.C. Circuit Court of Appeals.”

Trump administration appeals court loss in AT&T/Time Warner case

The US Department of Justice will appeal the court ruling that allowed AT&T to purchase Time Warner Inc.

AT&T completed the merger after getting a favorable ruling from a judge at the US District Court for the District of Columbia last month. The Trump administration’s Justice Department did not seek a stay of the ruling, so AT&T was able to take ownership of Time Warner. But the DOJ is appealing the judge’s ruling to the United States Court of Appeals for the District of Columbia Circuit, the DOJ said in a court filing today.

A court could theoretically force AT&T and Time Warner to reverse the merger. AT&T said it would maintain some separation between its old and new business units in a post-verdict letter to the DOJ. That separation might make undoing the merger logistically easier if the DOJ wins its appeal.

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