AT&T has divested its DIRECTV operation and is planning to spin out its WarnerMedia division in a deal with Discovery. HBO Max and HBO subscribers have reached nearly 70 million worldwide, up by 12.5 million in a year. HBO Max is launching in six more European countries, with further territories to follow.

After apparently failing to find synergies between media, entertainment and telecommunications, the AT&T strategy now seems to be to retain an economic interest in the media business and concentrate on its mobile and fibre network operations.

Having acquired Time Warner for over $85 billion, AT&T is now planning to divest WarnerMedia, combining it with Discovery, retaining a 71% stake in the new company. The deal is expected to close by the middle of 2022.

In the United States, HBO Max and HBO subscribers are up by over 7 million in a year to 45.2 million, but down over the quarter by 1.8 million after pulling the Amazon Prime Channel, alongside Disney and Netflix. Average revenue per subscriber of $11.82 a month.

HBO Max is due to launch in Spain and the Nordic region, with further markets due to roll out in 2022.

WarnerMedia direct-to-consumer subscription revenues were up to $2 billion for the third quarter, compared to $1.6 billion for the same period the previous year, contributing to operating income for the WarnerMedia business of just over $2 billion.

That can be compared to $19 billion in quarterly revenues from mobile, producing a contribution of approaching $6 billion in income.

AT&T completed the spin-out of DIRECTV to a separate company in August, together with its other television services. It retained a 70% interest in the company, with the remainder owned by TPG Capital, with an implied value of $16.25 billion, compared to the $48.5 billion it bought it for in 2015, $67 billion including debt.

At the end of June, there were around 15.40 million premium video subscribers across the DIRECTV, AT&T TV and U-verse platforms, down from 17.71 million a year before and 21.60 million a year before that. As DIRECTV is no longer a public company, it is no longer reporting subscriber numbers.

The AT&T Vrio business providing satellite television services in Latin America and the Caribbean is also up for sale. Vrio saw net subscriber losses of 178,000 over the quarter, driven primarily by secular declines and economic pressures in Brazil, and lower sales in other parts of the region. Vrio ended the third quarter with 10.14 million subscribers, down from 10.89 million a year previously.

John Stankey, the chief executive of AT&T, said the company was repositioning the business and was in the process of monetising $55 billion in assets. “We’re in the early innings of transforming the company and believe that we have significant opportunity ahead of us to expand share in our focus areas and drive better returns, including sustained earnings growth,” he told analysts.

“We set out, as we started HBO Max with a description of a product that we thought was going to be different,” he said. “I absolutely believe it is a unique breed of cat that, when combined with Discovery moving forward, will only strengthen its capabilities to become one of the must-have platforms of consumers moving forward, and a tremendous amount of value creation as that customer base is established globally.”

“I think everybody has been pretty impressed with the results of AT&T over the last year,” a J P Morgan analyst told the AT&T chief executive. “I would only follow up that the market is telling you that investors don’t believe it.”

On 21 October 2021, AT&T shares closed at just under $25.50 compared to around $37.00 two years previously.