AT&T sheds another video business as Crunchyroll deal closes

AT&T has successfully distanced itself further from its previous video aspirations after today closing its $1.175 billion deal to sell Crunchyroll to Sony.

Crunchyroll—which last week crossed a 5 million subscriber and 120 million registered user milestone—is a subscription streaming service focused on anime. Sony Pictures Entertainment acquired the company through Funimation, its joint venture with Sony Music Entertainment subsidiary Aniplex.

“Anime is a rapidly growing medium that enthralls and inspires emotion among audiences around the globe. The alignment of Crunchyroll and Funimation will enable us to get even closer to the creators and fans who are the heart of the anime community,” said Kenichiro Yoshida, chairman, president and CEO of Sony Group Corporation, in a statement.

RELATED: AT&T sells Crunchyroll to Sony for $1.175B

“Crunchyroll adds tremendous value to Sony’s existing anime businesses, including Funimation and our terrific partners at Aniplex and Sony Music Entertainment Japan,” said Tony Vinciquerra, chairman and CEO of Sony Pictures Entertainment, in a statement. “With the addition of Crunchyroll, we have an unprecedented opportunity to serve anime fans like never before and deliver the anime experience across any platform they choose, from theatrical, events, home entertainment, games, streaming, linear TV -- everywhere and every way fans want to experience their anime. Our goal is to create a unified anime subscription experience as soon as possible.”

For AT&T, the deal is about paying down its debt in hopes of reaching a net debt-to-adjusted EBITDA ratio of below 2.5x by the end of 2023. The company earlier this month completed a deal to spin off DirecTV, U-verse and AT&T TV into a new company. That transaction provided AT&T with $7.1 billion in cash and allowed it to transfer approximately $195 million of video business debt. AT&T is also pursuing a deal to sell and combine WarnerMedia with Discovery Inc. in a merger expected to close in 2022.