AT&T details plans for its three-tiered Netflix rival

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Nov. 30, 2018 / 12:08 AM GMT

By Claire Atkinson

AT&T executives on Thursday provided a roadmap for how the company plans to make money off its $85.4 billion acquisition of Time Warner: a three-tiered Netflix-style streaming service and the sale of some “non-core” assets — possibly including its minority stake in Hulu.

John Stankey, chief executive of WarnerMedia, the re-named content arm under AT&T that now includes HBO, CNN, TNT, TBS and Warner Bros. movie and television operations, said AT&T’s current products hit a narrow demographic and that the company planned to reach a much wider customer base.

WarnerMedia, which owns a library of still-popular shows including “Friends” and “The West Wing,” will offer multiple levels to its forthcoming streaming service: a movie-focused package, a premium service with original programming and blockbuster movies, and a third tier adding on its existing library and other licensed content.

“We really want the customer to want all three tiers,” he said. “We want the customer to commit all the way.”

Both Disney and AT&T are set to launch new streaming video services in 2019 in an effort to catch up to Netflix, which has a sizable lead with more than 137 million subscribers.

WarnerMedia also has other streaming services including HBO Now and AT&T Watch for its phone customers. AT&T also owns direct-to-consumer internet TV service DirecTVNow.

John Stephens, chief financial officer of AT&T, said the company plans to sell some assets as part of its plan to pay down debt and refocus the telecom giant for a new, content-driven era. Stephens said the company could sell its 10 percent stake in streaming service Hulu.

A company press release sent out as AT&T CEO Randall Stevenson took the stage at the event said the telecom operator, “expects to generate cash of at least $6 billion to $8 billion from other opportunities, including real estate sale-lease backs, sales of non-core assets and working capital initiatives.”

AT&T had $249 billion of debt after it acquired Time Warner.

Shares of AT&T rose 1 percent in after-hours trading.

Separately, AT&T is to meet the Justice Department in court next week. Oral arguments are to begin in the Justice Department’s appeal against a judge’s ruling that approved AT&T’s merger with Time Warner on Dec. 6.

The Justice Department has sought to block the merger and had asked AT&T to sell some assets in order to satisfy its antitrust concerns.

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