Summary
- AT&T continues to fail with creating a video streaming service that works.
- The new WarnerMedia streaming service called HBO Max won't launch until Spring 2020.
- HBO has failed to grow under the leadership of AT&T.
- My $40 price target is at risk as AT&T faces losing scale on HBO and taking a big hit to the major profit stream.
If any sign exists that AT&T (T) is an unmanageable conglomerate is that the new streaming service won't start until April 2020. The original purchase of Time Warner was announced in October 2016 questioning what is taking WarnerMedia so long to implement a new D2C streaming service while competition moves forward with aggressive plans and better bundling options.
Image source: AT&T website
Underwhelming Reveal
Heading up to the reveal of the new WarnerMeda video streaming service, AT&T had rallied to new 52-week highs. The stock hit a high above $34 just prior to the release of HBO Max on July 9.
The company has an interesting slate of new originals called Max Originals, but the ultimate value will probably occur with a slate of movies and series undetermined at this point. What didn't impress the market was this headline that proclaimed "Batwoman" as a future hit on The CW Network as the second content highlight for HBO Max.
AT&T rallied to $34 based on some excitement surrounding streaming service goals for reaching 70 to 80 million subscribers and production deals with J.J. Abrams. The official announcement of the DTC name came without all of the projections necessary to drum up investor excitement.
The move squelched any rally primarily because AT&T confirmed that an official launch in Spring 2020 is still far off. Investors originally expected a service launch not far after Disney (DIS) along with a similar presentation on the business model.
