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HBO Max expects subscriber impact from Amazon Channels exit - FierceVideo

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AT&T confirmed that HBO Max and HBO will cease to be offered through Amazon Prime Video Channels in the third quarter.

The company called it a strategic decision made by WarnerMedia and warned that there will be an impact on HBO Max and HBO domestic subscribers in the third quarter. However, that potential impact has already been considered into the company’s global subscriber guidance for the full year, which puts HBO and HBO Max at 70 million to 73 million global subscribers by the end of 2021.

The HBO update comes as AT&T is currently pursuing a deal to spin off and combine WarnerMedia—which includes HBO, Turner and Warner Bros.—with Discovery, Inc.

AT&T CFO Pascal Desroches, during an Oppenheimer investor conference this week, said part of the reason AT&T is divesting HBO Max is because the company didn’t feel like it was getting an appropriate amount of credit from the market for its success.

“And we felt that a more efficient capital structure would be to provide WarnerMedia with its own capital structure and stock so that investors who are interested in media would be able to invest directly into WarnerMedia,” he said. “So, it's a combination of we needed to make sure we had additional investment capacity as well as making sure that our capital structure was efficient and provided -- and unlock value for shareholders.”

RELATED: AT&T sheds another video business as Crunchyroll deal closes

In May, AT&T announced its proposed deal with Discovery to form a combined media company. Under the terms of the agreement, AT&T would receive $43 billion in a combination of cash, debt securities and WarnerMedia’s retention of certain debt. AT&T’s shareholders would receive stock representing 71% of the new company and Discovery shareholders would own 29% of the new company.

The transaction is anticipated to close in mid-2022 but last week, Discovery CEO David Zaslav said he was recently in Washington, D.C. and didn’t pick up on any potential headwinds for the deal that will bring together HBO Max and Discovery+ under one banner.

“There’s broad support for this transaction. We haven’t heard any pushback, we haven’t seen any public pushback,” he said. “Right now, it feels for us on every level like we’re seeing green lights. We’re not seeing any yellow or red lights.”

Zaslav added though that Discovery and WarnerMedia can’t control the timing around certain regulatory approvals from the IRS and the U.S. Justice Department.

“Ultimately it could be significantly sooner. It could be a little later. We’re just not in charge of the timing,” he said. “But we feel very good about it at this point. We’re still hoping that we could really get lucky and it will happen a lot sooner and that’s what we’re all pushing for.”

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HBO Max expects subscriber impact from Amazon Channels exit - FierceVideo
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