Analysts eye HBO Max uncertainty as AT&T readies Q1 earnings

HBO Max
Wells Fargo analyst Jennifer Fritzsche noted that AT&T in October said its HBO Max launch plans included 31 original programs. (HBO)

AT&T will report its first-quarter earnings tomorrow and HBO Max, which launches on May 27, will assuredly be a big topic of discussion.

AT&T’s WarnerMedia division today revealed the launch date for the service and the somewhat limited slate of originals that will be available on day one, given how the coronavirus outbreak has halted new productions.

Analyst firm UBS spoke with Matthew Ball, a venture capitalist and former head of strategy for Amazon Studios, about how late-to-market streaming services like NBCUniversal’s Peacock and HBO Max are missing out on the current COVID-related opportunity to add subscribers, with many Americans under stay-at-home orders and streaming a lot more video. Ball also said that future growth will be impacted by limited content due to production shutdowns.

However, Ball was “more constructive” on HBO Max considering its large library of high-quality content including series like “Friends,” “The Big Bang Theory,” “Doctor Who” and “Rick and Morty” along with more than 2,000 films in its first year.

RELATED: HBO Max picks May 27 launch date

Wells Fargo analyst Jennifer Fritzsche noted that AT&T in October said its HBO Max launch plans included 31 original programs. Though today’s release didn’t implicitly mention how many originals will be available at launch, only six were highlighted, with more coming in the summer and the fall.

“This is not overly surprising given production shutdown in wake of COVID,” she wrote in a research note.

Fritzsche said she’ll be watching tomorrow’s AT&T earnings to see if the company discusses how much has the COVID shutdown of production changed the timeline of the bigger splashier new content (i.e. the “Friends” reunion special) and if the company changes its longer term financial outlook for this product. Last October, the company said it expects to have 50 million domestic subscribers and 75-90 million premium subscribers overall by year-end in 2025 across the U.S., Latin America and Europe. By the same time, AT&T also expects HBO Max to be EPS accretive with $5 billion in incremental domestic revenue by 2025.

Cowen Equity Research also noted the limited original content for HBO Max – but pointed out that most streaming services will be in the same boat later this year.

Looking ahead, the research firm expects HBO Max to have 13 million U.S. subscribers by the end of 2020 and 24 million U.S. subscribers by the end of 2024, amounting to a compound annual growth rate of 19.1%.

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