HBO and HBO Max added 2.8 million subscribers in the second quarter, reaching 47 million in the U.S. and helping parent AT&T beat Wall Street forecasts.
Total AT&T revenue of $44 billion rose almost 8% from the year-earlier period and topped analysts’ consensus estimate of $42.6 billion. Earnings per share went up 7% to 89 cents, well ahead of analysts’ outlook of 79 cents.
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At WarnerMedia, revenue surged 31% to $8.8 million in the quarter, which ended June 30, as comparisons with the rough 2020 quarter grew favorable. Advertising revenue zoomed 49% as sports returned to form.
Several Warner Bros film titles scored during the quarter, both in theaters and on HBO Max, as the studio continued its day-and-date release strategy. Godzilla vs. Kong, released the day before the quarter began, collected most of its returns during the period.
HBO Max, which launched in May 2020 amid the coronavirus pandemic, has now topped 67 million global subscribers. AT&T upped its subscriber guidance to between 70 and 73 million subscribers by the end of 2021. (Previously, the number was 67 million to 70 million.)
At the end of the second quarter of 2020, HBO and HBO Max had 36.3 million subscribers, and 55.6 million worldwide. The company said in its earnings release that the domestic HBO/HBO Max subscriber tally consists of U.S. accounts “with access to HBO Max (including wholesale subscribers that may not have signed in).” AT&T has bundled access to the streaming service with several wireless and pay-TV subscription packages, in addition to making it available as a direct retail product across a number of distribution points.
WarnerMedia’s strong performance came as AT&T was announcing a spinoff of the entertainment company into a merged entity to be controlled by Discovery. That deal, revealed in May, is expected to close in the middle of 2022.
Some rivals have reached broader scale than WarnerMedia in the streaming chase. Disney has reached almost 104 million subscribers with Disney+ and Netflix this week reported hitting 209 million globally. But average revenue per user for HBO Max is near the head of the industry class. At $15 a month, it is positioned as a more robust offering, especially with the day-and-date Warner Bros titles, though in 2022 the film slate is due to return to many exclusive theatrical runs before streaming.
In addition to the WarnerMedia-Discovery plan, the spinoff of DirecTV into a new company in which private equity firm TPG will have a 30% stake, will close in the next few weeks, AT&T said in its earnings report.
AT&T has struggled to reduce its debt load after swallowing DirecTV and Time Warner. Neither acquisition proved entirely successful, saddling shareholders with tens of billions in losses.