AT&T’s WarnerMedia has HBO Max humming along after 2021 as the company prepares to hand off the business to Discovery, Inc.
As AT&T previously announced, total global HBO Max and HBO subscribers ended the fourth quarter at 73.8 million, up 13.1 million year over year. The service now has 46.8 million domestic subscribers after adding 5.3 million in 2021.
The company said domestic HBO Max and HBO subscriber average revenue per user (ARPU) of $11.15, hovering between the retail pricing for HBO Max ($15/month) and HBO Max with ads ($10/month).
The media segment recorded $9.9 billion in revenues, up 15.4% year over year, during the third quarter as rising subscriptions helped offset a decline in advertising.
Subscription revenues were $3.8 billion (up 5.4%) mostly thanks to HBO Max, while Content and Other revenues were $4.4 billion (up 45%) driven by higher TV licensing and theatrical. However, advertising revenues fell 12.9% to $1.6 billion, which AT&T attributed to lower audiences with tough comparisons with 2020’s political spending. Direct-to-consumer subscription revenues were up 11.5% in fourth quarter.
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As revenues roses so did operational expenses, up 38% to $8.3 billion due to higher marketing and programming costs along with “incremental selling costs associated with DirecTV advertising revenue sharing arrangements.” As a result, WarnerMedia’s operating contribution fell 37.8% to $1.6 billion.
AT&T said it’s still on track to close its $43 billion deal to spin off WarnerMedia and combine it with Discovery in the second quarter of 2022.
“A year and a half ago, we began simplifying our business to reposition AT&T for growth and we’re extremely pleased with how we’ve executed on that commitment,” said AT&T CEO John Stankey in a statement. “We ended 2021 the way we started it – by growing our customer relationships, running our operations more effectively and efficiently, and sharpening our focus. Our momentum is strong and we’re confident there is more opportunity to continue to grow our customer base and drive costs from the business.”