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Disney Plans to Expand in Streaming Business; Plans to Acquire 10% Hulu Stake from AT&T

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Reportedly, Disney is in talks with AT&T to acquire a 10 per cent stake that the latter holds in the streaming service media company Hulu, in order to expand its control over the company. AT&T carries the 10 per cent stakes in Hulu through its subsidiary WarnerMedia unit. Disney, currently, owns 30 per cent of shares in the streaming service and is already close to acquiring another majority stake in the same from the 21st Century Fox, which owns the rest of 30 per cent shares in the company.

Clearly, after the acquisition from 21st Century Fox and AT&T, Disney will be a 70 per cent stake owner in Hulu, and there will be only one other owner left with 30 per cent of the stakes in Hulu, i.e. the subsidiary of Comcast, NBCUniversal.

AT&T is in the process of settling off its extreme debts, and in 2018, it had announced that it would pay down at least $20 billion worth of debt in 2019, alone. Selling off the Hulu stakes is one of the major moves that the company has taken in order to settle its debts. It was in 2018 when the company announced that it is interested in selling its 10 per cent of shares it owns in Hulu. According to the reports, the deal between Disney and AT&T may close at $1 billion, which may help the latter to pay down its excessive debt to an extent.

Hulu has been providing its streaming services since 2007 but has always failed in front of its rivals including Netflix. But last year, the company started streaming its original content and gained much popularity among people. Also, the company registered 8 million new users in 2018. This increased client base has also increased the company’s worth. But still, it needs more focus and good content.

Disney already is looking forward to expanding its business in the streaming services and is working on its own home project for it, the Disney+. Disney+ will be a streaming service that will carry exclusive Disney movies and TV shows and will be launched by the end of this year. Initially, the service will be available domestically.

AT&T’s 5G Network will Go Live in 12 Cities by the End of this Week

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AT&T has been prepping for the launch of its 5G network for a long time, followed by a conference early this month, in which it demoed the speed of its upcoming 5G network. After such a long wait, AT&T has announced that its 5G network will go live on 21 December, in some of the parts of 12 cities in the United States. AT&T has become the first company to launch a mobile network based on the 5G standard, although Verizon had also launched its first 5G network earlier this year, as a home broadband replacement.

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Currently, the network is only available to a specific group of people. It’s not like you can go to a store and directly buy the hotspot from there. The company is mainly targetting to provide the service to the businesses in the area. There may be a strategy behind the idea, as the company might be still testing the network, and would want to assure that the service is working well before it goes out to more consumers. So the company is approaching the targeted clients by itself.

AT&T is offering a free 5G hotspot service to those companies, and won’t charge anything until the official launch. The company is planning to launch the network in the other parts of the world by the coming spring and will sell the hot spot for $499. It is also going to announce the monthly plan for the 5G network starting with $70 per month for 15GB.

The cities which have got the access to this 5G service are New Orleans, Charlotte, Atlanta, Raleigh, Houston, Indianapolis, Dallas, Louisville, Oklahoma City, San Antonio, Jacksonville, and Waco and the cities that may get access to the same service in the coming six months may include Nashville, Los Angeles, Orlando, Las Vegas, San Diego, San Johe and San Francisco. Even though AT&T will expand to those cities, here too, only some specific parts of those cities will be able to use the 5G network.

AT&T has also announced that it will launch two Samsung 5G phones in 2019, in the two halves of the year. The company is also offering tempting deals for the early subscribers of the 5G network along with free access to it for at least 90 days.

AT&T’s Ready to Launch its Three Tier Streaming SVOD Service

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Video streaming platforms like Netflix and Amazon Prime has replaced old traditional television, and now AT&T is also set to launch its new streaming video service by the end of this year, that will feature original movies and television series from Warner Bros., Turner and HBO. The tech giant is ready to transform into an entertainment giant with its new upcoming subscription video-on-demand service and has made some good strategies to achieve that.

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The streaming service will provide a three-tier subscription, starting with an “entry-level” subscription at the lowest monthly charges, that will accentuate on movies, and the user will get to watch the films from WarnerMedia’s catalogue with this subscription. The second one will endorse the “premium” subscription package, and will include the WarnerMedia TV series and “blockbuster movies”. The third tier is on the expensive side and will provide the user with all the first and second tier subscription services, plus it will offer an access to “extensive library of WarnerMedia and licensed content.”

AT&T had been preparing for the big launch of its video streaming platform, and the news had been confirmed by many of AT&T’s statements in the past. As AT&T has acquired HBO, it will emphasise more on promoting and streaming the content from HBO. Also, soon after its acquisition of TimeWarner, AT&T also established a WarnerMedia entity, to focus on WarnerMedia content specifically.

The tech giant is focused on more consumer engagement, and its goal is to have its share of profits from the consumers who have been spending $150 a month on entertainment and cable services. John Stankey, head of AT&T’s WarnerMedia unit said, “At the end of the day, that engagement is good for all of AT&T’s business.”

AT&T CEO Randall Stephenson said, “We have some of the world’s best content and 370 million direct-to-consumer relationships across mobility, video, broadband and our digital properties. That exceptional combination enables us to deliver a broad spectrum of entertainment experiences, from premium video to skinnier over-the-top and mobile-centric bundles of live content, and a subscription video-on-demand product to launch late next year. And with Xander, our advertising business, we’re using insights from our customers.”

Alongside AT&T, Disney is also planning to start its standalone streaming service, by the fall next year. And like these two companies, there are many other companies including Walmart that are willing to step into the same business. Netflix and Amazon have already made their separate place in the same, and with the combination streaming service that AT&T is about to start, the consumer will be able to get more discount on such service, which can shift their attention from Netflix and Amazon Prime to AT&T’s streaming network.

The Journey of the World’s Largest Telecom Company

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Telecommunication industry is considered the most progressive industry in the world. In the past more than a hundred years, from its origin to until now, it has seen a radical change. The time changed, but the company that belonged to the inventor of the telephone, Graham Bell, is still standing strong as the leading multinational conglomerate holding company. AT&T known as the largest telecommunication company has its own part in the history of the development of the telecom industry.

Birth of AT&T

After the discovery of the telephone, Graham Bell founded a company named the Bell Telephone Company, in 1880. By 1885, the company evolved as the American Telephone and Telegraph Company, the AT&T Co. AT&T, later, acquired the Bell Telephone Company, in December 1899. It started getting a hold on the customers in Canada and the United States, resulting in AT&T’s monopoly in the telecommunication industry. This growing monopoly of AT&T provoked the US government to drag the company to the court for an antitrust challenge. Later, it was settled outside the court on the basis of the Kingsbury Commitment, resulting in the government-authorised monopoly with the name of Bells System. The merger continued for the entire 20th century. Also, the company became the largest telephone company in the world.

After continuing for over 80 years, in 1981, the government-authorised monopoly was dissolved by the US regulations and resulted in the origin of smaller companies, including the Southwestern Bell. All the smaller companies started due to the break-up of the monopoly were known as Regional Bell Operating Companies or Baby Bells. The breaking-up of the monopoly also resulted in a rise in competition for AT&T as other independent telecommunication companies, like MCI and Sprint also came into the business.

The new Southwestern Bell company was founded by Robert G. Pope, who led the company with some really successful acquisitions. The company not only worked in the telecommunication but also acquired some of the cable companies and entered into the business of cable connections. In 1990, the company was rebranded as SBC Communications. The success of the company led it to the list of top 500 Fortune companies, in 1999.

In 2005, the SBC Communications was rebranded again, as AT&T Co., after it acquired its previous parent company, AT&T, for $16 billion. It also retained the iconic logo and stock-trading symbol of older AT&T.

Current Status & Achievements

The AT&T’s acquisition was followed by the other important ones as well, including the Mexican carrier Iusacell (2014), NII Holdings (2014), DirecTV (2015), Time Warner (2016), etc. The DirecTV deal was worth $48.5 billion and AT&T spent $108.7 billion for the acquisition of Time Warner. By 2017, AT&T became the world’s largest telecommunications company and second largest provider of the mobile telephone. AT&T is also the largest provider of fixed telephone services in the United States.

AT&T Planning the Trials of New Android-based Streaming Device in 2019

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AT&T, after facing a decline in its traditional pay-TV business, has decided and buckled up for launching its new streaming device, that, AT&T is, currently, beta testing. The streaming device, named as Osprey, is a set-top box, that targets to run on the Android TV and allows the access to other streaming apps. The news was officially announced by John Donovan, the CEO of AT&T Communications, on the third earnings call of AT&T.

Android TV
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AT&T went through a net loss of 346,000 traditional TV customers. Still, it has gained 49,000 for its DirecTV Now, streaming service and with the increasing popularity of Android TV, AT&T has figured out the way to recover its losses and lost customers. Developing a device basically to run with an Android TV can be considered a remarkable move for the business of AT&T.

Donovan said, “we expect this service to be EBITDA positive, and over time, it should lower the acquisition cost of our premium video service.” Last year, Variety reported the development of such device that was later, confirmed by AT&T.

The set-top box will support the voice remote, 4K playback, and also, will run the third-party Android apps. The company is more focused on improving profitability and will adopt more deliberate strategies, to break the deals. Donovan added, “Evaluating our channel lineups and taking a fresh look at how we can align content cost with the price.”

The device will be running on the DirecTV Now and the new DirecTV streaming version. AT&T will provide the same contracts and number of channels, in the new set-top-box, but mainly it is focused on eliminating the traditional satellite dish. The trial for the device is expected to start in early 2019, and there has been no statement about the final launch of the device in the market.